European Equities Close Lower as Traders Weigh ECB Stimulus Extension and OPEC's Raised 2016 Oil Ceiling
European equities closed lower on Friday as investors digested smaller-than-expected stimulus measures unveiled by the European Central Bank, an increase in the oil production ceiling by the Organisation of Petroleum Exporting Countries (OPEC) and a positive jobs report in the US, which boosted the chances of a U.S. interest rate hike.
ECB President Mario Draghi announced plans to extend the bank's stimulus program until March 2017 or beyond if necessary on Thursday. The central bank has been purchasing EUR 60 billion ($65.64 billion ) of government bonds per month since March in a bid to boost the eurozone's economy and had originally slated to end the program in September 2016.
Traders had expected further measures in the wake of still weak economic growth, such as an increase in the size of the bank's monthly purchases.
In Germany, new orders in manufacturing rose by 1.8% in October month-on-month, according to federal statistics office Destatis. And, in the US, 211,000 new jobs were created in November, the second strong jobs report to be published by Washington in as many months, ramping up expectations that the Federal Reserve will opt to raise interest rates at its forthcoming, mid-December meeting.
An increase in the US benchmark interest rate would stand to have a knock-on affect on the value of the greenback against the euro, potentially impacting the volume of goods imported in the US from Europe.
Also feeding into market sentiment was OPEC's decision to raise its oil production ceiling to 31.5 million barrels from 30.0 million barrels per day in 2016 in the face of severely depressed oil prices .
The bloc is responsible for 40% of the world's oil and, after more than 18 months of very low prices, there had been some speculation that OPEC would cut output to help restore an equilibrium between supply and demand. West Texas Intermediate crude oil futures for delivery in January fell by 1.2% at $39.87 per barrel in mid-day trade Friday.
In company news, packaging and paper company Mondi and commodities major Glencore led decliners on the FTSE 100, both ending 3.3% lower. Hospitality company Whitbread fell 2.9%. Pearson, a publishing and education company, and Intu Properties, a real estate investment trust, were 2.4% and 1.7% lower, respectively.
On the DAX, electricity and gas company RWE led decliners, slipping 4.3%, followed by energy giant E.ON, down 2%. Telecom company Deutsche Telekom was 1.7% lower, steelmaker ThyssenKrupp edged down by 1.6%, while kidney dialysis company Fresenius and pharmaceutical and chemical company Bayer were 1.5% and 1.1% lower, respectively.
And, on the CAC-40, chemicals group Solvay slumped 8.3%, leading decliners. Steelmarket ArcelorMittal followed with a 2.4% and oil major Total was down 2.3%. Project management company Technip edged 2.1% lower, and telecommunication company Orange fell 1.6%.
The FTSE 100 closed 0.59% lower, the DAX fell 0.34% and the CAC-40 contracted by 0.33%.
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