Eurozone markets gave up earlier gains yesterday after ECB chief Mario Draghi’s assurances of no change in stimulus policy sent the euro soaring to a nearly two-year high.
“The lack of change from the European Central Bank initially kept stocks in positive territory, but the sharp rally in the euro hit Continental equity markets,” said CMC Markets analyst David Madden.
London benefited as the pound weakened with the FTSE 100 ending the day nearly 1% higher.
Across Europe, the FTSE 100 was 0.77 % to 7,487.87 at close; Frankfurt’s DAX 30 was flat at 12,447.25, while the CAC 40 was down 0.32 % at 5,199.22 points.
The ECB kept its key interest rates unchanged as Draghi played down expectations the bank could soon announce an end to its mass buying of €60bn ($69bn) of government and corporate bonds per month.
“We need to be persistent, and patient,” Draghi said, as “really there isn’t any convincing sign of pickup” in inflation.
“The ECB played it safe today,” commented analyst Holger Schmieding of Berenberg bank as Draghi said discussions would continue in months to come. “European markets have seen a clear divergence thanks to the currency market fluctuations, with a Draghi-driven euro rally dragging the DAX lower amid a sharp FTSE ascent thanks to weakness in the pound,” said IG market analyst Josh Mahony.
The euro jumped more than 1% to $1.1642 near 1600 GMT — earlier touching $1.1658, its highest level since late August 2015.
US markets were little changed in midday trading after all three major US indices hit fresh record highs on Wednesday, which boosted Asia markets.
Tokyo stocks rose after Japan’s central bank cut its inflation forecasts, again meaning its easy money policies would remain in place.
The Bank of Japan retained its policy, as expected, but slashed its inflation outlook and once again put back its forecast for hitting a two-percent rate as it struggles to kickstart the world’s number-three economy.
Shanghai added 0.4% and Hong Kong added 0.3% to extend a rally into its ninth straight day.
In the world’s biggest economy, investors are upbeat about the corporate outlook in the US, but President Donald Trump’s woes and stuttering indicators, including on inflation, are keeping the dollar at multi-month lows.
Hopes are quickly fading for the tycoon’s promises to boost economic growth – which had fuelled a global rally after his November election – as the collapse of his key healthcare reforms this week throw his tax-cutting plans into doubt.
The euro jumped more than 1% to $1.1642 near 1600 GMT u2014 earlier touching $1.1658, its highest level since late August 2015.
