Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


While you were sleeping: ECB signals rate cut

While you were sleeping: ECB signals rate cut

Feb 8 (BusinessDesk) – European Central Bank president Mario Draghi sent equities and the euro lower with comments that he's concerned about the recent strength of the region's common currency, signalling a potential rate cut.

Draghi made the comments after policy makers of the ECB decided, as was widely expected, to keep the central bank's benchmark interest rate steady at a record low 0.75 percent.

The euro has appreciated 6.7 percent over the past six months, the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes.

"The exchange rate is not a policy target, but it is important for growth and price stability and we certainly want to see whether the appreciation is sustained and will alter our risk assessment as far as price stability is concerned," Draghi told a news conference, according to Reuters

The euro was last 0.9 percent lower against the US dollar.

"What we had not expected today was for the ECB to actually tie directly the higher or stronger euro to the inflation outlook in the euro zone,” Sireen Harajli, a foreign- exchange strategist in New York at Credit Agricole, told Bloomberg. “We think that it does increase the odds of a rate cut. We don’t think it’s going to happen in March, but we think that March will be key in terms of assessing the situation.”

Policy makers at the Bank of England also kept their key interest rate on hold at 0.5 percent, and did not alter their target for bond purchases.

Europe's Stoxx 600 Index ended the session 0.2 percent lower than the previous close. Equities also fell in London and Paris, dropping 1.1 percent and 1.2 percent respectively.

Today EU leaders began a two-day meeting aimed at negotiating the bloc's next budget.

On the other side of the pond, Wall Street also declined amid disappointing earnings including from News Corp and as the latest economic data provided a reminder that the recovery remains fragile.

The latest labour data were positive. Weekly initial jobless claims slid last week, pushing the four-week moving average to the lowest level since March 2008.

However, a separate report showed that fourth-quarter productivity posted its largest decline in almost two years, and unit labour costs climbed a larger-than-expected 4.5 percent.

In afternoon trading in New York, the Dow Jones Industrial Average shed 0.76 percent, while the Standard & Poor's 500 Index fell 0.66 percent, and the Nasdaq Composite Index declined 0.60 percent.

Shares of News Corp were last down 2.7 percent after the company reduced its profit forecast. It reported after the closing bell on Wednesday in the US.

Apple shares edged higher after hedge fund manager Daniel Einhorn sued the iPhone maker in a bid to convince it to distribute more of its cash hoard to shareholders. Einhorn said he's been trying to persuade the company's board to create a new class of preferred shares with a high dividend.

Meanwhile, bonds are losing favour with some investors.

“I’m short long-term government bonds,” betting the securities will fall, Jim Rogers, investors and author of the book “Street Smarts,” told Bloomberg. “I plan to short more. That bull market, that’s a bubble.”


© Scoop Media

Business Headlines | Sci-Tech Headlines


Shocking Dairy Footage: MPI Failing Our Animals And Damaging Our Reputation

Greens “Nathan Guy needs to urgently look into how his ministry is enforcing animal welfare standards, how these appalling incidents happened under its watch and what it’s going to do prevent similar incidents happening again in the future." More>>


Land & Water Forum: Fourth Report On Water Management

The Land and Water Forum (LWF) today published its fourth report, outlining 60 new consensus recommendations for how New Zealand should improve its management of fresh water and calling on the Government to urgently adopt all of its recommendations from earlier reports. More>>



Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news