Morning MoneyBeat Europe: Mixed Start Expected as Markets Mull Fed's Curveball

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Good Morning Europe

A mildly mixed start is expected for European stocks Thursday as the markets digest a Federal Reserve monetary policy statement which gave them what they expected, but with a twist.

The Fed did indeed drop the word 'patient' when it comes to its wait to raise interest rates, as investors had expected it would. However, any idea that this was code for an early rate increase seems to have been dispelled by renewed caution from the central bank on both growth and inflation.

The dollar has been clobbered by this turn of events, and forecasters expect a shakier open for the DAX as that weaker dollar weighs on exporters. The effect on the French and U.K. mainboards seems likely to be less pronounced.

Market Snapshot: U.S. markets (Wednesday close) DJIA up 1.3%, Nasdaq up 0.9%, S&P 500 up 1.2%. Nikkei (Thursday close) down 0.4%. Brent crude down 57 cents at $55.34. Gold up$19 at $1170.30. EUR/USD at $1.0774, USD/JPY at ¥120.57. 10 year Treasury yield 1.92%, Bund 0.16%, Gilt 1.62%.

Watch For: It's mostly about the U.S. on Thursday with weekly jobless claims numbers, the current account and the Philadelphia Fed survey all due.

What You May Have Missed on MoneyBeat

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BAML’s M&A Chair Joins HSBC Amid Big Push for U.K. Deals: Bank of America Merrill Lynch banker Philip Noblet is leaving his post to join HSBC’s U.K. advisory business, as the British firm seeks to bulk up its investment banking team, according to people familiar with the matter.

Robert Shiller Doesn’t Fear A Global Reckoning in Bond Market: Some of the biggest names in finance have tipped this week’s meeting of the Federal Reserve as a possible turning point in the bond market and potentially the beginning of a global reckoning. But Yale University professor Robert Shiller is far more sanguine.

BIS Questions Deflation Threat: New research from the Bank for International Settlements suggests that there is little to fear from even a persistent fall in the prices of goods and services, although a sharp decline in asset prices is a different matter.

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The U.K. Plans to Regulate Bitcoin Exchanges: The U.K. government is to regulate digital currency exchanges for the first time, in a bid to support innovation in the nascent technology while preventing criminal use.

Bank of England Sounds Alarm on Pound: Bank of England officials are worried that a strengthening pound risks prolonging a spell of ultra-low inflation in the U.K., a development that could put a brake on interest-rate increases expected to begin early next year.

Speculating on Denmark’s Krone? You Have Been Warned. Again: This is becoming a habit. Yet again Wednesday, the Danish central bank issued a warning to traders and investors to leave its currency alone.

The Swedish Shocker: Will It Work?: Another day, another central bank surprise. (Remember when central banks used to do things on set days? Happy times.) This time, the action came from Sweden, where the Riksbank broke with its schedule and unexpectedly cut its main interest rate further into negative territory. It also said it is increasing its bond buying program, citing unease with the strength of the krona, which has been flying high against the euro of late.

A Warren Buffett Lesson for Holcim: Watch Lafarge’s Value: Switzerland’s Holcim Ltd. has gotten cold feet about a one-for-one share exchange as the basis for its merger with France’s Lafarge SA.

From The Wall Street Journal

Fed Puts Interest-Rate Hikes in Play : The Federal Reserve offered several reasons it is still in no great rush to raise short-term interest rates and said it would move when it is reasonably confident that low inflation is on track to return to its 2% target.

Banks Struggle to Unload Oil Loans: Citigroup, Goldman Sachs, UBS and other large banks face tens of millions of dollars in losses on loans they made to energy companies last year, a sign of investor jitters in a sector battered by the oil slump.

European ‘Bad Bank’ Assets Draw Buyers: Business is booming for Europe’s “bad banks,” as investors, hungry for bigger returns in a low-interest-rate environment, race to buy assets parked in government-owned vehicles.