ECB President Lagarde Defies Powell's Dovish Stance: 'We Should Absolutely Not Lower Our Guard'
Portfolio Pulse from Piero Cingari
ECB President Christine Lagarde maintained a hawkish stance in the latest press conference, contrasting with Fed Chair Jerome Powell's dovish remarks. The ECB kept interest rates unchanged and signaled no discussions on rate cuts, focusing on a data-dependent approach. The ECB plans to sell securities from its Pandemic Emergency Purchase Programme at €7.5 billion monthly. Inflation and growth projections were updated, with inflation expected to average 5.4% in 2023 and economic growth to modestly increase. The euro strengthened, while European stocks dipped but currency-unhedged ETFs saw minor gains.
December 14, 2023 | 4:46 pm
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POSITIVE IMPACT
The Invesco CurrencyShares Euro Currency Trust ETF (FXE) rose by 1% following ECB President Lagarde's hawkish remarks, indicating a stronger euro.
Lagarde's hawkish stance and the decision to hold rates steady typically strengthen the currency, leading to a positive impact on FXE as it tracks the euro-dollar exchange rate.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
The Global X DAX Germany ETF (DAX) held onto minor gains despite a general downturn in European stocks following the ECB's rate decision.
DAX's minor gains can be attributed to the euro's strength, balancing out the negative sentiment from the ECB's hawkish stance.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
The iShares MSCI Italy ETF (EWI) managed to hold minor gains in the session, despite European stocks' negative reaction to the ECB's hawkish stance.
EWI's performance was slightly positive, likely due to the euro's appreciation, which offset the broader European market's negative response to the ECB's position.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
The MSCI France Index Fund (EWQ) sustained minor gains despite a general negative sentiment in European equities following the ECB's hawkish comments.
The minor gains in EWQ are likely due to the euro's strength, which helped mitigate the impact of the negative market sentiment following the ECB's decision.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
The SPDR DJ Euro Stoxx 50 ETF (FEZ) managed to hold minor gains despite European equities flipping to the downside after Lagarde's comments.
While European equities were negatively impacted, the strength of the euro helped FEZ maintain minor gains, indicating a neutral short-term impact.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70