In a fresh dig at politicians, Draghi said that to reap the full benefits from the ECB’s monetary policy measures, “other policy areas must contribute much more decisively, both at the national and at the European level”.
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Tokyo shares lost momentum after opening higher Friday, as investors focused on the outlook for United States and Japanese monetary policies after the European Central Bank held fire on more economic stimulus.
MARKETS OVERSEAS: News of the ECB’s decisions weighed on most of major stock indexes in Europe.
Forecasts for a modest takeoff in inflation to 1.2 percent next year and 1.6 percent in 2018 were barely changed.
In the media conference following the announcement European Central Bank president Mario Draghi said he hoped Euro zone governments might finally step up and unleash some fiscal stimulus, referring to a recent announcement made by policymakers at the G-20 summit in China.
ENERGY: Oil prices lost some of their overnight surge, which followed a report indicating fuel stockpiles fell precipitously last week.
ECB President Mario Draghi said the bank was looking at options to enable it to pursue the money-printing program, but maintained the March end-date for the plan, disappointing investors who were looking for more immediate action, including an extension or expansion of the current plan. The pound GBPUSD, +0.1124% firmed 0.1% to $1.3359 compared with $1.3342. The statement was a disappointment for many traders, who hoped for a more dovish message, but gold did not get a boost, despite the initial weakening of the USA dollar (the rise in the EUR/USD exchange rate was only temporary). Germany’s DAX fell 0.7 percent, while France’s CAC-40 declined 0.3 percent. Benchmark U.S. crude was up 58 cents, or 1.3 percent, to $46.8 a barrel in NY. The FTSE 100 index of leading British shares rose 0.2 percent.
Prolonging the purchases is controversial because it risks further distorting market prices and even running out of eligible bonds. Investors were even more puzzled when Draghi admitted the EBC didn’t have any discussion as to an extension of the asset-purchase plan, as he stressed that the European Central Bank was focused on the current programme implementation and admitted that the bond shortage seems to be an issue despite previously dismissing it.
In commodities, Brent crude oil gave back some of Thursday’s rally, and last traded down 1.3% at $49.35 a barrel. US Treasury yields also rose, with benchmark 10-year Treasury notes down 14/32 in price to yield 1.587%, from 1.539% late on Wednesday. Hong Kong’s Hang Seng rose 0.8 percent to 24,099.70, while the Shanghai Composite slipped 0.6 percent to 3,078.85.
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Fed funds futures prices on Thursday after the jobless claims data indicated that investors see a 21 percent chance of a rate hike at the Federal Open Market Committee meeting this month, from 15 percent late on Wednesday. The euro climbed to $1.1251 from $1.1245.
