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Following an ultimately upbeat Asia session, the pan-European Stoxx 600 equity index is up 2.2 per cent — powered by bouncing banks — as US index futures suggest the S&P 500 will gain 1 per cent to 2,010.
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Better risk appetite is boosting growth-focused assets like industrial commodities. Brent crude is gaining 2.1 per cent to $40.89 a barrel after the International Energy Agency said oil prices may have “bottomed out”, and copper is up 0.9 per cent to $4,939 a tonne.
The chipper mood is curtailing demand for US government bonds, pushing 10-year Treasury yields up 2 basis points to 1.95 per cent, and haven currencies like the yen, which is 0.6 per cent softer at Y113.85.
The euro, easing 0.6 per cent to $1.1107, has calmed down after a violent display on Thursday that left it at a three-week high.
The common currency plunged then surged in a 4 per cent range following the ECB’s announcement of a bigger than expected stimulus package, with investors struggling to digest its implication for financial markets after president Mario Draghi implied he was reluctant to push borrowing costs deeper into negative territory.
“[I]nitial market enthusiasm was tempered by ECB President Draghi’s comments in the press conference that he ‘does not anticipate’ more rate cuts, based on the current economic situation. This statement led the market to price out most of the expected future rate cuts,” analysts at UBS said.
But Friday sees a more positive response as traders appear to welcome the central banks’ attempts to combat insipid inflation and boost economic growth.
Amid the prospect of more ECB bond buying, benchmark eurozone bond yields are nudging lower.
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GLOBAL MARKET OVERVIEWLast updated: March 11, 2016 11:13 am
ECB bazooka blasts stocks higher
Jamie Chisholm, Global Markets Commentator
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Better risk appetite is boosting growth-focused assets like industrial commodities. Brent crude is gaining 2.1 per cent to $40.89 a barrel after the International Energy Agency said oil prices may have “bottomed out”, and copper is up 0.9 per cent to $4,939 a tonne.
The chipper mood is curtailing demand for US government bonds, pushing 10-year Treasury yields up 2 basis points to 1.95 per cent, and haven currencies like the yen, which is 0.6 per cent softer at Y113.85.
The euro, easing 0.6 per cent to $1.1107, has calmed down after a violent display on Thursday that left it at a three-week high.
The common currency plunged then surged in a 4 per cent range following the ECB’s announcement of a bigger than expected stimulus package, with investors struggling to digest its implication for financial markets after president Mario Draghi implied he was reluctant to push borrowing costs deeper into negative territory.
“[I]nitial market enthusiasm was tempered by ECB President Draghi’s comments in the press conference that he ‘does not anticipate’ more rate cuts, based on the current economic situation. This statement led the market to price out most of the expected future rate cuts,” analysts at UBS said.
But Friday sees a more positive response as traders appear to welcome the central banks’ attempts to combat insipid inflation and boost economic growth.
Amid the prospect of more ECB bond buying, benchmark eurozone bond yields are nudging lower.
The 10-year German bond yield, which moves inversely to the price, and which at one stage in the previous session touched just 0.16 per cent and then 0.33 per cent, is down 2 basis points on the day at 0.28 per cent.
Equivalent maturity Italian and Spanish paper are slipping 10bp to 1.34 per cent and 6bp to 1.50 per cent, respectively.
The more policy-sensitive 2-year German bond yield remains mired in negative territory, its minus 0.46 per cent close to the new minus 0.40 per cent deposit rate offered by the ECB.
In contrast, the US 2-year Treasury yield is up 2bp to 0.94 per cent, its highest for nearly two months. This reflects growing expectations that the Federal Reserve may be better able to increase interest rates now that the ECB’s actions have added to the global easing trend.
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The Fed is not forecast to make a move at next week’s meeting but futures markets are now pricing in a 45 per cent probability it will raise rates at the June gathering, up from 38 per cent at the start of the month.
This is helping to underpin the greenback, and the dollar index is up 0.6 per cent to 96.60 — a move that is contributing to a spot of profit-taking in gold.
The yellow metal revelled in the broader market volatility displayed on Thursday, closing at its highest level in 13 months, but it is now easing $9 to $1,262 an ounce.
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Earlier in Asia, stock markets recovered from an early bout of nerves to finish mostly higher. Japan’s Nikkei 225 added 0.5 per cent and Australia’s S&P/ASX 200 rose 0.3 per cent.
In Greater China, the Shanghai Composite climbed 0.2 per cent and Hong Kong’s Hang Seng advanced 1.1 per cent.
The People’s Bank of China set the “fix” for the renminbi — the daily midpoint reference rate around which its 2 per cent trading band against the dollar is set — 0.34 per cent higher at Rmb6.4905 per dollar.
