Mario Draghi and his European Central Bank colleagues disappointed the markets on Thursday by refusing to deliver what speculators were demanding. Ultimately, the ECB will have to do more to fight off deflationary threats; after all, it cut its own inflation and growth estimates at Thursday’s policy meeting.
On Friday, we found out that the Eurozone’s painfully slow economic recovery continued for another quarter. Surprisingly, the growth was fuelled by better performances from some of the peripheries, although France did well, too, as it expanded 0.3% over the quarter.
Despite Friday’s non farm payroll-inspired losses, U.S. stocks are still looking strong from both the fundamental and technical points of view. The latest U.S. jobs report has shown that the labor market is continuing to improve at a solid pace, which bodes well for the economy as a whole.
One central bank ends QE, another increases it. This is not a trick, but a treat for the markets. The global equity markets found additional buoyancy on Friday after the Bank of Japan surprised the markets overnight by expanding its monetary easing program to about 80 trillion yen a year, up from Y60tn-Y70tn previously.