European stocks surge on ECB stimulus

| credits: http://www.sev.asn.au
Europe’s main stock markets rallied Tuesday after
an ECB executive board member signalled that the
eurozone central bank would temporarily ramp up
its stimulus programme, the AFP reported.
In the eurozone, the benchmark CAC 40 index of
top companies in Paris soared 2.09 per cent to
close at 5,117.30 points, while Frankfurt’s DAX 30
surged 2.23 per cent to 11,853.33 points compared
with the close on Monday.
London’s benchmark FTSE 100 index ended the
day up 0.38 per cent at 6,995.10 points, with gains
tempered by news that British inflation fell into
negative territory for the first time since 1960.
In foreign exchange, the euro sank to $1.1152
down from $1.1315 late in New York on Monday.
“Equity markets are ecstatic over the news that
the ECB will front-load its bond buying scheme,
and the short-term boost to the QE scheme has
driven stock markets around Europe higher,” said
analyst David Madden at trading firm IG.
ECB member Benoit Coeure, speaking at a
conference in London on Monday, declared that the
bank would purchase more assets than previously
planned in May and June under its multi-billion-
euro quantitative easing stimulus programme,
owing to an expected market slowdown in the
summer months.
“We are … aware of seasonal patterns in fixed-
income market activity with the traditional holiday
period from mid-July to August characterised by
notably lower market liquidity,” he said.
He added that the ECB is “moderately front-loading
its purchase activity in May and June, which will
allow us to maintain our monthly average of
€60bn”.
The ECB has stated that the QE stimulus, launched
in March at a pace of €60bn a month, would last at
least through September 2016.
ECB chief Mario Draghi last week declared that the
bank’s massive stimulus for the eurozone will
remain in force “as long as needed” to stabilise
prices.