European markets edge lower ahead of ECB meeting

European stocks edged lower Thursday ahead of a European Central Bank (ECB) meeting where policymakers will announce their latest monetary policy move amid the coronavirus pandemic.

The pan-European STOXX 600 index dropped 0.3% lower in early trade, while autos slid 1.5% to lead losses and media stocks bucked the trend to rise by 0.6%.

The German DAX DAX, -0.41% had a fall of 0.6% as Germany adopted a €130 billion worth of economic-stimulus package for this year and 2021.

In addition, both the euro EURUSD, -0.26% and the British pound GBPUSD, -0.46% edged lower following recent gains. London’s FTSE 100 fell slightly from three-month highs.

Also, futures on the Dow Jones Industrial Average YM00, -0.29% had a drop of 74 points.

The ECB is set to announce its plan, which will expand the bank’s coronavirus crisis bond-buying program for the battered euro zone economy, at 12:45 p.m. London time.

It is expected that the bank will expand its €750 billion Pandemic Emergency Purchase Program, by €500 billion, after ECB President Christine Lagarde downgraded the central bank’s eurozone GDP estimate to a fall between 8% and 12% this year.

“Equity markets are in a mild phase of consolidation ahead of the ECB meeting and later on the Fed, though it is very mild suggesting optimism,” Sebastien Galy, macro strategist at Nordea Asset Management, wrote in a morning note.

“We expect a bit of volatility around the announcement but a positive development for credit should feed into the European stocks especially financials for the periphery.”

SS