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

 

While you were sleeping: ECB disappoints too

While you were sleeping: ECB disappoints too

August 3 (BusinessDesk) – A day after the US Federal Reserve provided investors with reassurances but little immediate action, the European Central Bank also disappointed markets by doing the same.

Hopes had been high after ECB President Mario Draghi's comments last week that the central bank will do "whatever it takes" to preserve the euro. However, Draghi today simply reiterated the possibility of buying Italian and Spanish government bonds to ease borrowing costs, without further details. He said he needs more time.

"The Governing Council ... may undertake outright open market operations of a size adequate to reach its objective," Draghi told a news conference after the ECB's monthly meeting. Further details aren't expected until September.

“The market was looking for a big bazooka from Draghi, and they were disappointed by the lack of a coherent plan,” Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York, told Bloomberg News. “A timetable and a start date would comprise meat on the bones. The market wanted a plan and they got a framework, and the reaction was ultra-negative.”

Stocks on both sides of the Atlantic fell as a result, as did commodities, the euro and bonds of euro-zone countries that are considered at risk of needing international financial assistance, especially Spain and Italy.

US Treasuries provided fresh appeal for investors seeking refuge from the risk of the global economic slowdown and lack of central bank intervention. Yields on 10-year and 30-year debt fell to record lows today.

Spanish 10-year bond yields, however, rose back above 7 percent. Italy yields also surged. In contrast, German yields fell. German opposition to the ECB buying government bonds remains a key challenge for Draghi to overcome.

In late afternoon trading in New York, the Dow Jones Industrial Average dropped 1.10 percent, the Standard & Poor's 500 Index shed 1.01 percent and the Nasdaq Composite Index slumped 0.66 percent. In Europe, the Stoxx 600 Index ended the day with a 1.3 percent slide on the previous close. Shares in Spain and Italy plunged.

Meanwhile, the Bank of England maintained its current bond-buying program. The central bank's Monetary Policy Committee held the quantitative-easing target at 375 billion pounds as expected and held the key interest rate at a record low of 0.5 percent.

Investors are eyeing Friday's US jobs data which is expected to show that employers added 100,000 new workers to their payrolls last month, according to surveys by both Reuters and Bloomberg, up from 80,000 in June.

US corporate earnings are maintaining the quarter's trend of beating expectations when it comes to profits but falling short on the revenue front. About 72 percent of companies which reported quarterly results have surpassed analysts’ estimates, according to data compiled by Bloomberg. Sales fell short of expectations at 59 percent of companies.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 


Serious Fraud Office: Commences Enquiries Into Allegations Of COVID-19 Wage Subsidy Fraud
The Serious Fraud Office has commenced a number of enquiries into alleged abuse of the Government’s COVID-19 Wage Subsidy. Director Julie Read said the allegations relate to multiple complex cases of potential fraud that have been referred to the agency following extensive investigations ... More>>



Environment: Preliminary Environmental Data On New Zealand’s Air Quality Released Today

The Ministry for the Environment and Stats NZ have published the Our air 2021: preliminary data release today. We are currently working to revise the Our air 2021 report to incorporate analysis of the World Health Organization (WHO) 2021 air quality guidelines that were released on 23 September 2021... More>>


Statistics: Food Prices Rise For Sixth Consecutive Month
Food prices rose 0.5 percent in September 2021 compared with August 2021, mainly influenced by higher prices for grocery food and meat, poultry, and fish, Stats NZ said today. September’s movement is the sixth consecutive monthly rise. After adjusting for seasonality, prices rose 0.9 percent... More>>



Reserve Bank: Robust Balance Sheets Yield Faster Economic Recovery

Stronger balance sheets for households, businesses, financial institutions and the government going into the pandemic contributed towards maintaining a sound financial system and yielding a faster economic recovery than following previous deep recessions... More>>


Transpower: Releases Independent Report Into Events Of August 9
Transpower’s Chief Executive Alison Andrew has today released an independent report into the grid emergency of August 9 when insufficient generation was available to meet demand, leading to some customers being disconnected... More>>

Bayleys: Latest Lockdown Adds Further Fuel To Industrial Property Market

The recent construction shutdown resulting from Auckland’s Covid 19’s lockdown restrictions has put additional pressure on an industrial property market that is already struggling to keep pace with demand... More>>