European stocks dropped Thursday as oil and gas shares slumped and oil prices dipped below $79 USD per barrel.
Thursday, November 13, 2014
The Stoxx Europe 600 declined 0.2% to 334.45. France’s CAC 40 fell 0.3%, Germany’s DAX 30 fell 0.3% and the UK’s FTSE 100 lost 0.2%. December Brent crude dipped 1.8% to $78.90 USD per barrel. Oil indices Total SA and Royal Dutch Shell PLC declined 1.6% and 1.3%, respectively.
Bloomberg reported that Brent crude oil fell to its lowest price per barrel in four years as OPEC indicated it would not cut output. Saudi Arabian Oil Minister Ali Al-Naimi dismissed the possibility of an OPEC price war.
European inflation projected to slow
The European Central Bank conducted a survey of economic forecasters, who predicted inflation rates will increase by a mere 0.5% this year, reported MarketWatch. The same survey in September indicated a 0.7% gain. The 2015 inflation rate is expected to be 1%, while 2016 inflation should come in at 1.4%. Those numbers fall well short of the ECB’s target inflation rate of 2% in the medium term.
ECB President Mario Draghi planned to begin an asset purchasing program called quantitative easing as a measure to spur economic growth in the region. The plan was met by opposition from several officials, including Bank of France Governor Cristian Noyer and German central bank Bundesbank President Jans Weidmann.
“ … [W]e have since seen a gradual [inflation] deterioration across both countries and the continuation of this would likely mean a diminished degree of opposition to ECB easing in the future,” Joshua Mahony, research analyst at Alpari UK, told MarketWatch. Any move lower in CPI readings from the countries “would surely lead to a softening of their respective stance as the need for stimulus to gain traction in prices is increasingly needed.”
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