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

 


While you were sleeping: Draghi flags possible rate cut

While you were sleeping: Draghi flags possible rate cut

May 9 (BusinessDesk) – European stocks climbed while the euro slid against the US dollar as European Central Bank President Mario Draghi signalled a potential interest rate cut next month.

The ECB kept, as had been anticipated, its key interest rate steady at a record low 0.25 percent but suggested it might lower it in June if needed.

“The governing council is comfortable with acting next time but before we want to see the staff projections that will come out in early June,” Draghi said after the central bank’s policy meeting.

Europe’s Stoxx 600 Index finished the session with a gain of 1.1 percent from the previous close. The UK’s FTSE 100 rose 0.6 percent, Germany’s DAX added 0.9 percent, while France’s CAC 40 jumped 1.4 percent.

"They signalled through the press conference that a rate cut is likely in June," Martin Schwerdtfeger, a foreign exchange strategist at TD Securities in Toronto, told Reuters.

The euro slid 0.4 percent against the greenback, after rising as high as US$1.3993 earlier in the session, the highest level in 2-1/2 years.

“Draghi’s guidance was the key takeaway from today’s press conference,” Robert Lynch, a currency strategist at HSBC Holdings in New York, told Bloomberg News. “The more overt signal of the potential -- if not the outright intention -- to ease policy next month has already worked to drive euro-dollar down after the pair nearly eclipsed the US$1.40 threshold.”

Draghi’s comments also bolstered the appeal of bonds in the euro zone, pushing yields lower.

Across the Atlantic, equities seesawed through the day. With about an hour of trading left in the day in New York, the Dow Jones Industrial Average rose 0.29 percent. The Standard & Poor’s 500 Index was down 0.01 percent, while the Nasdaq Composite Index slipped 0.07 percent.

An early rally in some of the momentum technology stocks faded as the day unfolded.

In testimony to a US Senate panel, Federal Reserve Chairman Janet Yellen said it might take five to eight years for the Fed to unwind its monthly bond purchases. The central bank’s balance sheet has widened to more than US$4 trillion from about US$800 billion in 2007.

"We've not decided, and we'll probably wait until we're in the process of normalising policy to decide, just what our long-run balance sheet will be," Yellen said, adding it will be "substantially lower" than it is now, Reuters reported.

"If we do that [stop re-investing funds from expired assets] and nothing more, it would probably take somewhere in the neighbourhood of five to eight years to get it back to pre-crisis levels," according to Yellen.

Gains in shares of AT&T and Walt Disney, last up 1.9 percent and 1.5 percent respectively, outweighed declines in shares of Merck and UnitedHealth, last down 1.4 percent and 1.2 percent, to keep the Dow in the green.

The latest data showed initial claims for state unemployment benefits fell 26,000 to a seasonally adjusted 319,000 for the week ended May 3.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Strike: Lyttelton Port Workers Vote To Escalate Dispute

Members of the Rail and Maritime Transport Union (RMTU) at Lyttelton Port today voted to escalate their industrial action. Around 200 RMTU members have been operating an overtime ban since 17 December and today they endorsed a series of full withdrawals of labour at the port. More>>

ALSO:

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

NASA, NOAA: Find 2014 Warmest Year In Modern Record

Since 1880, Earth’s average surface temperature has warmed by about 1.4 degrees Fahrenheit (0.8 degrees Celsius), a trend that is largely driven by the increase in carbon dioxide and other human emissions into the planet’s atmosphere. The majority of that warming has occurred in the past three decades. More>>

ALSO:

Scoop Business: New Zealand’s Reserve Bank Named Central Bank Of The Year

The Reserve Bank of New Zealand’s efforts to stifle house price inflation by using new policy tools has seen the institution named Central Bank of the year by Central Banking Publications, a publisher specialising in global central banking practice. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news