Mr Draghi, the president of the ECB, has failed to deliver a new way to tackle the eurozone economic crisis. The bank has kept interest rates at 0.5%, as dealers expected, but did not discuss the possibility of introducing negative interest rates for financial institutions, as some economists were hoping, in an attempt to encourage lending throughout the region. Mr Draghi instead highlighted the fact that inflation is low, which tells us how weak demand is in the area. These remarks weighed on investor sentiment; UK and European stocks were positive before the statement but ended down on the day.
In London, the banking sector was the biggest loser today; it lost nearly 2.5% as dealers are concerned about the level of exposure London-listed banks have to the eurozone.
Across the pond, the Dow is down 40 points at 14,920. US equities haven’t been hit as badly as their European counterparts as the ECB comments have less impact in the country. Tomorrow they will announce the non-farm payrolls, and if the report is better-than-expected equities could fall, as it will fuel anticipation that the Federal Reserve might taper their stimulus package.