Europe close: IFO surprise, 'dovish' ECB fail to inspire
Stocks on the Continent finished lower, albeit off their worst levels, after a better-than-expected reading on the prestigious IFO institute's German business confidence index failed to completely reassure worried investors and despite very dovish remarks from top central bank officials around the world.
Shortly after the release of the above survey, and helping to buttress sentiment, European Central Bank executive board member, Benoit Coeure, told a conference in Lisbon that: "I don't think we have been to the limit of what we can do. I'm confident we can do it once again."
Yet by the end of trading, the benchmark Stoxx 600 was down by 0.45% to 374.33, alongside a dip of 0.15% to 11,346.65 for the German Dax, while France's Cac-40 had slipped 0.18% to 5,260.64.
Nevertheless, shares on the Continent had begun the session with bigger losses, tracking a downdraft on Wall Street last Friday which had carried over into Asian trading at the start of the week.
Traders and analysts meanwhile weighed in with very disparate views on the outlook for stockmarkets.
For UniCredit Research chief economist, Erik Nielsen, the US economy was on the rapidly dwindling life-support from the Trump administration's past tax cuts and the recent rally in stocks should be used to turn more defensive.
On a more positive note, JP Morgan's global equity strategist, Mislav Matejka, told clients: "we do not think that the weakness [in global equities] needs to last long, or be very material, as positioning is still light. We advise to use it as an opportunity to add further, as we expect the rebound to gain fundamental traction in 2H."
Matejka also disagreed with the consensus view that "margins can only go lower as cycle is old and input costs are rising."
In an unexpected boost for sentiment, the prestigious IFO institute's German business confidence index rose from a level of 98.7 for February to 99.6 in March (consensus: 98.7).
But Andrew Kenningham at Capital Economics noted how a sub-index linked to the sector in fact retreated.
"This does not change our view that Germany is likely to continue flirting with recession for 2019 as a whole. We recently revised down our forecast for GDP growth this year to only 0.8%," he said.
In the background, speaking overnight in Hong Kong, US Federal Reserve bank of Chicago boss, Charles Evans, told an audience that downside risks to the economy were greater than those to the upside and that interest rate cuts might be needed. Former Fed chair, Janet Yellen, reportedly echoed his assessment.
US-China trade talks were also in focus, on the back of a report in the Financial Times that Beijing was "refusing to budge" on Washington's demands for it to relax curbs on digital trade.
Elsewhere, according to the latest poll from GAD3, Spain's Socialists extended their lead in polls ahead of the 28 April general elections by 0.3 percentage points to 30.9%.
However, in order for the incumbent Pedro Sanchez to retain the country's presidency who would again be forced to call on the support of the far-left Podemos movement and Catalan nationalist parties.
In parallel, the Belgian central bank's own business confidence survey improved from a print of -1.0 for February to a reading of -0.7 in March (consensus: -2.0).
To take note of, there was also considerable interest in the scheduled launch, on Monday night, of Apple's video streaming service.
According to Spanish financial website Bolsamania.com, which cited several people familiar with the matter, Bankia and Banco Sabadell held talks - denied by both lenders - throughout 2018 aimed at a possible tie-up.
But plans for a merger were finally shelved following price drops in the shares of both lenders and due to the impossibility of first arranging a divestment by the state in order to avoid it holding too large a stake in the new firm.
French luxury goods group, LVMH, registered extreme volatility, with its shares starting roughly 9% below the level at which they had finished the previous week, amid reports of a so-called 'fat finger' trade, yet even so managing to eke out a small gain for the session.
Stock in Bayer was also moving sharply lower, even after its boss was quoted at the weekend saying that management retained the supervisory board's backing despite the recent second ruling against the company for the Roundup herbicide it inherited from US group Monsanto.
Shares of Peugeot were lower after the Wall Street Journal reported that rival Fiat Chrysler had rejected approaches from the French carmaker earlier in 2019.
Airbus shares rallied into the close on the back of reports of an impending large order from China.