The Dow Jones Industrial Average ended 252 points or 1.42% lower at 17,478 while the S&P 500 was down 30 points or 1.44% at 2,049.
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Only a day after the European Central Bank’s latest move to easy policy, discord between euro zone rate setters over the decision is becoming apparent, suggesting any further step to stimulate inflation may face a higher hurdle.
The ECB stressed that no monetary financing was taking place here because the sovereign bonds that are being purchased in huge quantities by national central banks are bought on the secondary markets, not the primary market. It was the total opposite of what many traders and strategists anticipated would happen. The U.S. Federal Reserve Board is widely expected to raise interest rates for the first time in nine years at its meeting December 16, which would probably further soften the euro against the greenback.
The ECB also pushed back the deadline for its $66 billion monthly bond-buying program, which had been set to expire as soon as September 2016.
Meanwhile, the dollar’s recovery on Friday saw China’s yuan lose ground. Europe’s initial disappointment has been contagious, hitting global markets and setting a weak tone as we close out the week. With the price of crude oil hovering at low levels, consumer prices are also not on an upward trend, giving rise all the more to fears that European economies will plunge into deflation.
While November payrolls might not be as impressive as the 271,000 new jobs created in October, economists still expect a solid addition of 200,000 jobs for last month. She added the bank will need to be cautious about raising rates from near zero, but added that – even after an initial increase – Fed funds rates would remain accommodative.
No news or research item is a personal recommendation to deal. It earlier had risen to a session high of 0.987 per cent after the jobs report.
Yesterday’s sharp drop was triggered by Mario Draghi’s announcement that the European Central Bank would not significantly increase quantitative easing.
The yield on the benchmark 10-year Treasury note was 2.278 per cent, compared with 2.328 per cent Thursday.
The euro was down just 0.1% against the dollar at $1.09290.
In metals, gold rose $7.40, or 0.7 percent, to $1,061.20 an ounce, silver rose seven cents to $14.08 an ounce and copper rose three cents to $2.06 a pound.
This time, however, his announcement of a range of measures to enhance money-printing fell short of what investors had hoped for, prompting some to question whether Mr Draghi is losing his magic touch.
“There was a good argument for a smaller move so as to not influence the Fed and let them do what they needed to do”, the source said.
They said the ECB would likely allow the Swiss National Bank to leave rates unchanged at its next meeting Thursday.
The stronger euro “was the main reason why the market dropped so heavily yesterday”, said Hervé Samour-Cachian, a fund manager at Natixis Asset Management, which oversees $US350 billion in assets.
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Mr Oliver noted that most share markets, particularly the eurozone, fell as a result.
