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

 


While you were sleeping: ECB cuts rates, starts QE

While you were sleeping: ECB cuts rates, starts QE

Sep. 5 (BusinessDesk) - Equities advanced in Europe after the European Central Bank lowered three key interest rates and announced plans to start buying assets next month in an effort to bolster the euro-zone economy.

After opening higher, shares on Wall Street reversed and were lower in late trading amid concerns about falling oil prices.

The ECB’s moves, however, marked a turning point in President Mario Draghi’s fight to bolster growth and stir inflation in the euro zone. The policy decisions are expected to have a longer-term impact on the outlook for the global economy too.

"Following four quarters of moderate expansion, euro-area real GDP remained unchanged in the second quarter of this year compared with the previous quarter,” Draghi said in a statement.

“While it partly reflected one-off factors, this outcome was weaker than expected. With regard to the third quarter, survey data available up to August indicate a loss in cyclical growth momentum, while remaining consistent with a modest expansion.”

The ECB now predicts the region’s annual real GDP will grow by 0.9 percent in 2014, 1.6 percent in 2015 and 1.9 percent in 2016. Both the projections for real GDP growth for 2014 and 2015 have been revised downwards and the projection for 2016 has been revised upwards from the ECB’s previous estimates in June.

“The Governing Council sees the risks surrounding the economic outlook for the euro area on the downside,” Draghi said. “In particular, the loss in economic momentum may dampen private investment, and heightened geopolitical risks could have a further negative impact on business and consumer confidence. Another downside risk relates to insufficient structural reforms in euro-area countries.”

Equities rallied on the move. Europe's Stoxx 600 climbed to finish the day with a 1.1 percent gain. Germany’s DAX climbed 1 percent, France’s CAC 40 jumped 1.7 percent, while Spain’s IBEX 35 Index advanced 2 percent. The UK’s FTSE 100 Index inched 0.06 percent higher, held back by BP, which lost a key US court ruling over its responsibility for the Gulf of Mexico oil spill.

"The last time the ECB president made such a strong statement back in 2012, when he said he would take whatever action necessary to support the economy, it stabilised risk assets across the globe," Anwiti Bahuguna, senior portfolio manager for Columbia Management in Boston, told Reuters. “I think this is a very similar moment.”

Wall Street, after opening higher, was lower in late trading. The Dow Jones Industrial Average slid 0.24 percent, the Standard & Poor’s 500 Index shed 0.22 percent and the Nasdaq Composite Index fell 0.11 percent. Earlier the S&P 500 reached a record high 2,011.17. The selling was linked to energy producers, following a slide in the price of oil.

Here, the latest data showed a cooling in the pace of hiring last month. ADP Research Institute said private-sector payrolls climbed 204,000 in August, following a gain of 212,000 in July. A separate report showed initial jobless claims rose to 302,000 last week.

"The broad evidence is that the labour market continues to improve at a very solid rate," John Ryding, chief economist at RDQ Economics in New York, told Reuters.

Other data showed the Institute for Supply Management’s services index rose to 59.6 last month, from 58.7 in July.

Eyes are now on the Labor Department’s monthly jobs report, scheduled for release on Friday. US companies may have added 230,000 workers last month after 209,000 in the month prior, according to the median estimate in a Bloomberg survey.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Scoop Business: NZ Broadcasters Launch Battle Against Global Mode ISPs

New Zealand broadcasters have confirmed they’ve launched legal proceedings against internet service providers who give customers’ access to “global mode”, which allows customers access to offshore online content, claiming it breaches the local content providers’ copyright. More>>

ALSO:

Sanford: Closure Of Christchurch Mussel Processing Plant Confirmed

The decision comes after a period of consultation with the 232 staff employed at the Riccarton site, who were told on 9 April that Sanford was considering the future of mussel processing in Christchurch. Recent weather patterns had impacted on natural spat (offspring) supply... More>>

ALSO:

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news