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Equity markets are ecstatic over the news that the European Central Bank will front-load its bond buying scheme, and the short-term boost to the quantitative easing scheme has driven stock markets around Europe higher.
The euro smashed through the $1.12 level as traders moved quickly to short the single currency, and this in turn is making eurozone stocks even more attractive to investors outside the currency region. The remarks about speeding up the bond buying over the summer period came just in time as Greece is off the radar.
The ECB’s stimulus package is here to stay for many more months, and today’s move will leave the door open for further front-loading down the line. The UK has slipped into deflation, with sterling sinking on the back of it, and equity traders have been given another reason to buy into the market as an interest rate hike fades from the horizon.
ICAP shares are lower this morning after the inter-dealer broker revealed a decline in full-year revenue and profits. ICAP has been struggling to adapt to the post-credit crisis era, where tighter regulation and reduced risk taking by banks is bruising the broking business. However, it is adjusting to its new environment by focusing more on the electronic broking operations, with traditional phone broking is losing its share of voice. Shares in
Land Securities set a new seven-year high today when the company announced a doubling of full-year pre-tax profits. Rock bottom interest rates in the UK have seen property prices rise and rental demand ramp up, and since the Bank of England is showing no sign of hiking rates in the near future Land Securities will remain in ‘excellent shape’.
We are expecting the Dow Jones to open 50 points higher, at 18,350. The US market closed at a record high last night, and the comments from Benoit Coeure of the ECB will keep the index in its upward trend.
The latest economic updates from the US have been a touch on the disappointing side, and there is little fear of a rate rise next month. In the meantime the bulls are showing no indication of slowing down.