LONDON (AP) – European stock markets surged Thursday while the euro has tanked after the European Central Bank unveiled a bigger than anticipated stimulus for the 19-country eurozone economy.
KEEPING SCORE: In Europe, Germany’s DAX was up 2.4 percent at 9,959 while the CAC-40 in France spiked 2.8 percent to 4,549. The FTSE 100 index of leading British shares rose 0.6 percent to 6,183. Wall Street was poised for a solid opening with both Dow futures and the broader S&P 500 futures up 0.8 percent.
BOLD ECB: The central bank that governs the euro currency surprised financial markets with a bolder than anticipated stimulus package. Notably, it cut the main refinancing rate to zero from 0.05 percent. It also reduced the interest rate on deposits held by banks at the central bank to minus 0.4 percent from minus 0.3 percent. And it expanded its monthly bond-buying program to 80 billion euros ($85 billion) a month from the previous 60 billion. Mario Draghi, the ECB’s president, will explain the reasoning behind the raft of measures at a press conference shortly.
ANALYST TAKE: “The central bank came out all guns blazing,” said Craig Erlam, senior market analyst at OANDA. “The decision to ease monetary policy across a broad range of tools sent a strong message to the markets that it is not willing to sit by while they repeatedly fall well short of their 2 percent inflation target.”
EURO DOWN: One of the biggest impacts from the ECB’s package of measures was on the euro, which slid 1. 2 percent to $1.0857. The lower returns on euro holdings and the prospect of more euros in circulation weighed hard on Europe’s single currency.
NEW ZEALAND CUT: New Zealand’s central bank also lowered its benchmark interest rate to a record low 2.25 percent Thursday, saying the rate could go lower yet as the country grapples with weak international growth and lower prices for its crucial dairy exports. That pushed New Zealand’s S&P/NZX 50 INDEX up 0.8 percent to 6,505.28. But some Asian markets fell back after an early burst of buying following the news.
ASIA’S DAY: Japan’s Nikkei 225 closed 1.3 percent higher to 16,852.35. Australia’s S&P ASX 200 edged 0.1 percent lower to 5,150.10, Hong Kong’s Hang Seng index fell 0.1 percent to 19,984.42 and South Korea’s Kospi added 0.8 percent to 1,969.33. China’s Shanghai Composite Index fell 2 percent to 2,804.73. Southeast Asian markets were mixed.
ENERGY: U.S. crude shed 11 cents to $38.18 a barrel in electronic trading on the New York Mercantile Exchange. It jumped 4.9 percent or $1.79 Wednesday to $38.29. Brent crude, which is used to price international oils, lost 20 cents to $40.87 a barrel.