The European Central Bank kept its stimulus program unchanged as policy makers try to assess the economic damage inflicted by the U.K.’s vote to leave the European Union.
Officials left the main refinancing rate at zero, the deposit rate at minus 0.4 percent and asset purchases at 80 billion euros ($88 billion) a month as predicted in a Bloomberg survey. Britain’s decision to split from its main trading partner will loom large as President Mario Draghi addresses reporters at 2:30 p.m. in Frankfurt.
Draghi has predicted the U.K. referendum result will slow euro-area growth and he may signal officials are ready to deploy more stimulus in September, when they will also have new economic forecasts.
European Central Bank President Mario Draghi said on Thursday events in Turkey since the coup attempt may impact economic sentiment in the euro zone.
"It is very difficult to see how these geopolitical events will affect the (euro zone) economy," he told a news conference, referring to Britain's Brexit vote as well. "It's very likely they will affect confidence."
U.S. home resales hit their highest level in nearly 9-1/2 years in June as low interest rates lured first-time buyers into the market and the number of Americans filing for unemployment benefits fell last week, underscoring the economy's strength.
Although another report on Thursday showed factory activity in the mid-Atlantic region contracted this month, a surge in new orders and shipments suggested the setback was likely temporary.
"The economy is doing well and is weathering the global turbulence. With housing and consumers powering ahead, some of the clouds are dissipating and summer looks good from a data point of view," said Thomas Costerg, a U.S. economist at Standard Chartered Bank in New York.
The National Association of Realtors said existing home sales increased 1.1 percent to an annual rate of 5.57 million units last month, the highest level since February 2007.
It was the fourth straight month of increases and left sales 3 percent higher than a year ago. Economists polled by Reuters had forecast sales slipping to a 5.48 million-unit pace in June.
Economists had forecast initial claims rising to 265,000 in the latest week. Claims have now been below 300,000, a threshold associated with a healthy labor market, for 72 straight weeks, the longest stretch since 1973. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1,250 to 257,750 last week.
The claims data covered the survey week for July's nonfarm payrolls. The four-week average of claims fell 9,000 between the June and July periods, suggesting another month of strong job gains. The economy added a whopping 287,000 jobs in June, the largest this year.
In a third report, the Philadelphia Federal Reserve said its business index fell to a reading of -2.9 this month from 4.7 in June. But the new orders component rose to 11.8 from -3.0 in June and shipments rebounded to 6.3 from -2.1 in June.
Manufacturing has been hurt by a strong dollar and sluggish global demand, which have undercut U.S. exports, as well as efforts by businesses to reduce an inventory overhang. Lower oil prices have also weighed on manufacturing as energy firms cut back on capital spending in response to reduced profits.
Oil prices fell 2 percent on Thursday, as the market took a closer look at U.S. government data that showed growing inventories of gasoline and other oil products pushed total petroleum supplies in the No. 1 oil consumer to record highs.
U.S. West Texas Intermediate (WTI) crude settled down $1, or 2.2 percent, at $44.75.
Reference: Reuters, Bloomberg
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