Stock markets were erratic on Thursday with most major arenas violently swinging between losses and gains as the messy combination of depressed oil prices, a resurgent U.S. Dollar and rising European Central Bank stimulus hopes kept investors on edge.
The European Central Bank kept interest rates on hold at historic lows on Thursday and its president said the Bank was committed to pursuing substantial asset purchases aimed at spurring growth and inflation.
The U.S. dollar advanced against most majors with the Canadian and Australian dollars the outliers as commodity prices continue to rally after the OPEC production cut deal was announced. Chinese data is once again in the spotlight with the release of its real gross domestic product (GDP) and industrial production on Tuesday, Oct. 18 at 10:00 pm EDT.
European stock markets have started Friday’s session brightly, extending their advance from the late afternoon rebound on Thursday. The rally has probably taken many people by surprise, although this shouldn’t be the case given that the markets in both the UK and United States are still very close to their all-time highs.
European Central Bank President Mario Draghi said on Thursday the bank was looking at options to ensure it could pursue its unprecedented money-printing program, with euro zone inflation still way below its official target.
The Euro was flung onto a chaotic rollercoaster ride on Thursday following the European Central Bank’s decision to keeping its monetary policy stance unchanged despite the worrying state of the European economy. Official interest rates were left unchanged while monthly asset purchases of $80 billion were confirmed to run until the end of March 2017 which left investors empty handed.
A moderate stimulus package from the Bank of Japan overnight got the final trading day of the week off to a disappointing start, leaving traders to look towards the large number of earnings and data releases today to pick them up again.
The European Central Bank decision and press conference today may not be quite the event that it was in March but with the bazooka still warm following last month’s antics, Mario Draghi may instead see today as an opportunity to take some of the fizz out of the euro, something he failed to do previously.