Friday, 7 February 2014

Stocks rise as ECB signals readiness to act

Global stocks rallied on Thursday. The S&P 500 Index rose 1.2 percent and the STOXX Europe 600 rose 1.5 percent, the best gains of the year for both. The MSCI Emerging Markets Index rose 1.4 percent.

The European Central Bank had left monetary policy unchanged at its meeting on Thursday but signalled its readiness to increase stimulus soon. Bloomberg reports:

European Central Bank President Mario Draghi said the ECB could take action to counter low inflation as soon as next month, when more data on the euro area’s economy will be available.

“We are willing and we are ready to act,” Draghi said in Frankfurt today after the ECB left its benchmark interest rate on hold at a record-low 0.25 percent. “The reason for today’s decision not to act has really to do with the complexity of the situation that I described and the need to get more information.”

European economic data on Thursday provided little urgency for action from the ECB.

German factory orders fell 0.5 percent in December. However, orders were 6.0 higher than a year ago after having jumped 2.4 percent in November.

The Bank of England also left monetary policy unchanged on Thursday after its meeting.

Meanwhile, in the US, a report on Thursday showed that the trade deficit increased in December after exports fell 1.8 percent and imports rose 0.3 percent. That still left the trade deficit for the whole of 2013 at its smallest since 2009.

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