European markets find ECB cheer and Chinese holiday respite

European stocks shot higher Thursday as investors enjoyed a respite from volatile Chinese markets, closed for a long Discount Holidays © holiday weekend, and took cheer from hints of more central bank stimulus. London’s benchmark FTSE 100 index climbed 1.82 percent to close at 6,194.10 points, the CAC 40 in Paris gained 2.17 percent to finish at 4,653.79,, while Frankfurt’s DAX 30 jumped 2.68 percent to end at 10,317.84. The European Central Bank boosted market sentiment when president Mario Draghi said policy makers were ready to ramp up its contentious bond purchase programme — known as quantitative easing — if more stimulus is needed in the single currency area.

“The asset purchase programme provides sufficient flexibility in terms of adjusting the size, composition and duration of the programme,” Draghi told a news conference after the ECB announced it was keeping its key interest rates unchanged at record lows. “The ECB has shown markets the safety net. If required, the ECB could scale up its monetary stimulus,” said Berenberg Bank economist Holger Schmieding. The ECB also cut its growth and inflation forecasts for 2015-2017, noting the downside risks from low oil prices and the economic slowdown in China1. But the main take-away for analysts was that “the strong message is that the ECB is ready and prepared to increase its policy support for the eurozone economy in the near future.” said Jonathan Loynes, chief European economist at Capital Economics. Investors also found some relief in the calm of Asian markets Thursday with China’s bourses, which have been hammered recently by slowing growth in the world’s second largest economy, shut for a public celebration. “At least for a few days, concerns over China can be put to one side while the country closes its exchanges to celebrate seventy years since the end of World War II,” said CMC Markets UK analyst Jasper Lawler.

The euro, which had been holding around $1.1220, fell to $1.1109 in late afternoon London trading. – EasyJet (Other OTC: EJTTF2news3) soars – In corporate action, shares in low-cost airline EasyJet soared 5.38 percent to close at 1,762 pence after it raised its full year pre-tax profit forecast to a record 675-700 million pounds (917-950 million euros, $1.03-1.07 billion). Shares (Berlin: DI6.BE4news5) in supermarket chain Morrison jumped 4.72 percent to 170.80 pence on reports that South African billionaire Christo Wiese, already present in the British market, may go on a shopping spree. In Switzerland, shares in Syngenta (Xetra: 5808546news7) grew 3.46 percent to 338.20 francs after the agricultural products giant announced a share buyback of more than $2 billion and that it would sell its vegetable seeds business. Syngenta, which last week saw its share price plunge 18 percent after US seed giant Monsanto finally dropped its campaign to buy it, said the measures aimed to “accelerate shareholder value creation”. However shares in French electricity company EDF (Paris: FR00102425118news9) slumped 2.24 percent to 18.290 euros after it announced a further delay in the startup of its next-generation nuclear reactor in Flamanville, which will increase the cost overruns for the project.

US markets extended their Wednesday rebound on Thursday, buoyed by the ECB’s signals on stimulus and with the Chinese bourses out of the mix. In mid-day trading in New York, the Dow Jones Industrial Average rose 0.64 percent, the S&P 500 was up 0.86 percent, and the Nasdaq Composite gained 0.53 percent. The Dow had ended with a 1.8 percent gain on Wednesday as did the broader S&P 500, with the tech-heavy Nasdaq Composite jumping 2.5 percent. Those gains had helped Asian trading. Tokyo ended 0.48 percent higher as the yen remained weak, while Seoul ended slightly higher and there were comfortable gains for Singapore and Taipei. Shanghai and Hong Kong were closed to mark World War II Victory Day commemorations in China. Lingering concerns about Australia10‘s commodity dependent-economy kept Sydney in the red, with the ASX 200 ending down 1.44 percent, while the “Aussie” dollar struggled at around six-year lows marginally above 70 US cents (Other OTC: UBGXF11news12) .

References

  1. ^ China (uk.news.yahoo.com)
  2. ^ EJTTF (uk.finance.yahoo.com)
  3. ^ news (uk.finance.yahoo.com)
  4. ^ DI6.BE (uk.finance.yahoo.com)
  5. ^ news (uk.finance.yahoo.com)
  6. ^ 580854 (uk.finance.yahoo.com)
  7. ^ news (uk.finance.yahoo.com)
  8. ^ FR0010242511 (uk.finance.yahoo.com)
  9. ^ news (uk.finance.yahoo.com)
  10. ^ Australia (uk.news.yahoo.com)
  11. ^ UBGXF (uk.finance.yahoo.com)
  12. ^ news (uk.finance.yahoo.com)

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