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

 


While you were sleeping: ECB measures lift equities

While you were sleeping: ECB measures lift equities

June 6 (BusinessDesk) – Wall Street climbed to record highs as investors welcomed unprecedented stimulus from the European Central Bank which underpinned expectations for the worldwide economy.

Meanwhile, US weekly jobless claims were better than expected, a welcome sign before the monthly government jobs report due on Friday. Initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 312,000 for the week ended May 31, according to Labor Department data.

In the final hour of trading in New York, the Dow Jones Industrial Average gained 0.64 percent, the Standard & Poor’s 500 Index rose 0.68 percent, and the Nasdaq Composite Index climbed 1.08 percent. The Dow and S&P 500 touched record highs earlier in the session, respectively reaching 16,845.31 and 1,941.74.

Gains in shares of Caterpillar and Microsoft, up 2.5 percent and 2.3 percent respectively, led the Dow higher.

“The stimulus from Europe is a positive thing, especially when you compare it to the fact that the US is starting to ease up,” Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research, told Bloomberg News. “Stimulus is being added from a different market.”

The European Central Bank cut its benchmark interest rate to 0.15 percent, from 0.25 percent. It also lowered the deposit rate by 10 basis points to minus 0.10 percent, meaning the ECB is charging banks for depositing money with it. It is the first major central bank to take one of its main rates negative.

The ECB also opened a 400-billion-euro (US$542 billion) facility to encourage banks to lend more freely to businesses in the euro zone.

The measures also include “preparatory work related to outright purchases of asset-backed securities,” ECB President Mario Draghi told reports in Frankfurt on Thursday.

“The key ECB interest rates will remain at present levels for an extended period of time in view of the current outlook for inflation,” Draghi said. “This expectation is further underpinned by our decisions today. Moreover, if required, we will act swiftly with further monetary policy easing.”

“The Governing Council is unanimous in its commitment to using also unconventional instruments within its mandate should it become necessary to further address risks of too prolonged a period of low inflation,” according to Draghi.

Europe's Stoxx 600 Index ended the session with a 0.4 percent gain from the previous close. Germany’s DAX rose 0.2 percent, while France’s CAC 40 added 1.1 percent. The UK’s FTSE 100, however, slipped 0.1 percent.

The DAX broke through the 10,000 point mark for the first time before easing.

The euro added 0.4 percent against the US dollar. The respite for the single currency is already being viewed as temporary, encouraging bets that the ECB will need to be even more aggressive in the months ahead.

At least for today though, Europe’s top policymakers are getting a positive response.

“The ECB is providing stimulus and that will help the global economy. It’s a powerful force in keeping world interest rates low,” Kathy Jones, fixed income strategist at Charles Schwab in New York, told Reuters. “Draghi delivered."

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news