ECB Hints at Further Easing: Could the Rally Be Short-Lived?
Europe’s major indexes rose
Of Europe’s major indexes, the United Kingdom FTSE 100 (EWU), the France CAC 40 (EWQ), and the German DAX (EWG) rose 2%, 2.9%, and 2.6%, respectively, on Monday, February 15, 2016, after Mario Draghi’s statement.
Draghi’s statement
Mario Draghi, the president of the European Central Bank (or ECB), said at the European parliament’s economic and monetary affairs committee meeting on Monday that the Eurozone (EZU) (FEZ) is facing significant challenges. To overcome these challenges, a strong effort is required from all of its policymakers.
Draghi hinted that there could be more stimulus measures in the next monetary policy review meeting in March if the ECB believes the current economic slowdown, deflationary situation, financial market turmoil, and lower crude oil prices are weighing further on the economy. He also said that the ECB’s policymakers are ready to reconsider 1.5 trillion euros worth of stimulus in the next policy review meeting on March 10, 2016.
After the ECB president’s statement, Banco Santander (SAN), ING Groep (ING), and Unicredit (UNCFF) rose 3.7%, 5.8%, and 3.3%, respectively, on the same day, as financial stocks are sensitive to interest rate movement.
Going forward in this series, we will discuss why the rally in Europe’s major indexes might be short-term.
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