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The markets were not expecting the ECB to do all of them at one go, certainly not after the disappointment at the December meeting.
The ECB went beyond that, and literally fired a bazooka at the markets. They announced:
• A 10bps cut to the deposit rate to -0.40% (expected)
• A 5bps cut to the main refinancing rate (benchmark rate) to 0% (not expected)
• A 5bps cut to the margin lending rate to 0.25% (not expected)
• QE monthly purchase expanded by €20 billion to €80 billion (Bigger than expected)
• New series of longer-term refinancing operations (Somewhat expected)
Draghi said that risks to the Euro-area growth are tilted to the downsides, which was reflected in the lower growth and inflation forecasts at the meeting. As a result, monetary policy will remain accommodative. Draghi commented that rates will remain at current low or lower levels for an extended period, but he backtracked somewhat by saying that he anticipated no further cuts based on the current view.
The conclusion that market participants take away is that the ECB might not have much firepower left, which is why the EUR/USD retraced much sharply than its initial tumble. The stronger euro will be counter-productive to recovery in the euro-area, but that is perhaps not something the ECB can control well.
Risk sentiments are taking a backseat now, as European indices closed deep in the negative yesterday, while US equities were sluggish. In early Asia, Japan and Australia are already soaking in losses, which could be replicated in the rest of Asia today, particularly if China also heads south.
Singapore cuts jobs in oil and gas
Business Times reported that hundreds more people in the oil and gas sector in Singapore will face the axe as low oil prices continue to bite. Keppel has reduced its global headcount by 6,000 and its Singapore sub-contract work by 7,900. SembMarine has announced job cuts of 3,000 - 4,000 at their FY15 earnings briefing.
In addition, foreign players such as Chicago Bridge & Iron, and BW Offshore are said to be shedding jobs too. The share price in Keppel Corp struggled at the S$6 mark, but remained 3.3% lower in Mon-Thu after last week’s +18.2% surge. Similar moves were also observed in Sembcorp Marine.