European markets were mixed on Thursday afternoon as investors digested the latest ECB interest rate decision.
As of 16:12 CEST, Germany's Dax fell 0.19%, France's CAC 40 declined 0.46%, the STOXX 600 dropped 0.28%, while Spain's IBEX 35 rose 0.23% after the European Central Bank (ECB) once again cut interest rates.
The ECB, as widely expected by the markets, opted to cut its key deposit rate by 25 basis points to 2%, its lowest level in more than two years. Meanwhile, the interest rates on its main refinancing operations and the marginal lending facility will also be lowered to 2.15% and 2.40% respectively, taking effect from 11 June 2025.
Markets anticipating ECB rate cut
The latest decision comes as inflation in the euro area cooled more than expected in May.
Annual consumer price growth slowed to 1.9% in May, down from 2.2% in April, according to a flash estimate from Eurostat this week. The figure came in below economists' forecast of 2%, and marks the first time inflation has dipped below the ECB's 2% target since September 2024.
The decline in headline inflation suggests that business uncertainty, partly driven by renewed global trade tensions and soft consumer demand, is weighing on pricing power across sectors.
Core inflation, which strips out volatile food and energy prices, also showed signs of easing. It slowed to 2.4% in May, from 2.7% in April, falling below expectations of 2.5%. On a monthly basis, core prices rose by just 0.1%.
Asian shares mixed as US futures edge lower
Meanwhile, Asian shares were mixed on Thursday, as Wall Street’s big recent rally lost some momentum following a pair of potentially discouraging reports on the American economy.
Japan's benchmark Nikkei 225 shed 0.2% to 37,658.46, while Australia's S&P/ASX 200 declined nearly 0.1% to 8,535.10.
In South Korea, the Kospi jumped 2.1% to 2,829.48 after the country's new president and leading liberal politician Lee Jae-myung began his term, vowing to restart talks with North Korea and beef up a trilateral partnership with the US and Japan.
Hong Kong's Hang Seng gained 0.9% to 23,856.54, while the Shanghai Composite was little changed, inching down less than 0.1% to 3,374.30.
In the US, the S&P 500 was 0.3% lower in US morning trading, while the Dow Jones Industrial Average was down 162 points, or 0.4%. The tech-heavy Nasdaq composite was also lower, down 0.2%.
In other dealings, benchmark US crude fell 8 cents to $62.77 a barrel. Brent crude, the international standard, edged up 1 cent to $64.87 a barrel.
The US dollar rose to 142.87 Japanese yen from 142.78 yen. The euro cost $1.1413, little changed from $1.1418.