Friday March 11th

11-03-2016

Wall Street set to follow Europe higher after Draghi

U.S. stock index futures pointed to a sharply higher open, with Dow futures up in excess of 100 points, as markets started to digest the aggressive easing measures announced on Thursday by the European Central Bank (ECB). European equities rallied, with the pan European STOXX 600 up 2.3 percent as banking stocks led the way, with Italian banks all up in the region of 6 percent, and German and French lenders not far behind. "In many respects, yesterday's package of measures from the ECB exceeded expectations. Certainly, the 20 billion euro increase in monthly asset purchases to 80 billion euro and extension to non-bank corporate paper was at the upper range of predictions for the quantitative easing program," said head of economic research at Daiwa Capital Markets, Chris Scicluna. "And the innovative nature of the new TLTRO II (targeted longer-term refinancing operations) program, whereby banks will be incentivized to lend into the real economy with the carrot of being paid to borrow from the ECB, should be more effective at the margin at supporting bank lending," he said. Oil prices registered strong gains, aided by a weaker dollar as the euro managed to hang onto gains seen on Thursday, after ECB President Mario Draghi hinted that rates may have reached a floor. In U.S. economic news, February import prices declined 0.3 percent, while export prices fell 0.4 percent. Asia markets reversed early losses to finish mostly higher on Friday, as traders digested fresh easing from the European Central Bank (ECB) overnight. The Japanese benchmark Nikkei 225 erased losses to close up 86.52 points, or 0.51 percent, at 16,938.87. The index was still down 0.44 percent for the week. Across the Korean Strait, the Kospi ended higher by 2.08 points, or 0.11 percent from Thursday's close, at 1,971.41. Hong Kong's Hang Seng index closed up 215.18 points, or 1.08 percent, at 20,199.60. Down Under, the S&P/ASX 200 closed up 16.32 points, or 0.32 percent, at 5,166.40, registering a 1.5 percent gain for the week. Chinese markets finished mixed, with the Shanghai composite up 4.44 points, or 0.16 percent, at 2,809.17. The Shenzhen composite closed down 3.73 points, or 0.2 percent, at 1,685.23. Brent crude was on track for its third weekly gain on Friday, supported by an optimistic report from the International Energy Agency and a weaker dollar, which makes fuel cheaper for importers using other currencies. Still, analysts cautioned that a large physical glut remained, with Goldman Sachs warning that U.S. crude could saturate storage in coming months. U.S. crude futures were trading at $38.46 a barrel at 8:45 a.m. ET (1345 GMT), up 62 cents from their last close, having hit a 2016 high of $38.86 earlier in the day. Brent crude futures were at $40.49 a barrel, up 44 cents, and on track for the third consecutive weekly gain. Gold edged lower on Friday as the dollar rebounded, but prices remained within reach of a 13-month high touched in early trade after the European Central Bank's announcement of new easing measures. ECB President Mario Draghi rolled out steps on Thursday including increased asset buying and a deeper cut to deposit rates, but signaled there would be no further rate cuts. Spot gold rose as far as $1,282.51 an ounce, its strongest since Feb. 3, 2015, before falling 0.46 percent to $1,265.19, as the dollar rebounded from a three-week low versus the euro and European equities fell.