Friday 27 April 2018

Draghi comments give a welcome boost to European markets

European Central Bank (ECB) President Mario Draghi. Photo: Reuters
European Central Bank (ECB) President Mario Draghi. Photo: Reuters

Bloomberg/Colm Kelpie

European stocks posted their biggest two-day gain since October 2011 on increased investor confidence that central banks will act to support markets.

By the close in Dublin, the ISEQ Overall Index was up 1.61pc, or 100.83 points, to end the trading week at 6,356.18.

The leaders on the Dublin market included insulation group Kingspan, which increased 4.6pc to €22.70, while drinks group C&C rose 2.3pc to €3.58. On the other side of the board, the laggards included speciality baker Aryzta, which slipped 0.7pc to €40.08, while CPL Resources dropped 1.5pc to €5.91.

Elsewhere, the Stoxx Europe 600 Index rose 3pc to 338.36 at the close of trading, taking its two-day climb to 5pc. It added 2.6pc this week - its biggest such gain since November - after rising the most in a month yesterday following European Central Bank President Mario Draghi's signal of an increase in stimulus as early as March.

The volume of shares changing hands was 41pc higher than the 30-day average. The VStoxx Index measuring volatility expectations for Eurozone shares slid 11pc.

"There is hope of more stimulus in March and potential for even more stimulus in Japan and China, so if we get concrete positive economic news the rebound could last into next week," said John Plassard, senior equity-sales trader at Mirabaud Securities in Geneva.

Central banks are returning to centre stage as concern over Chinese growth rocks international financial markets, and the prolonged slide in oil prices puts inflation targets out of reach.

Pressure is increasing on the Bank of Japan to enlarge stimulus at its meeting next week, while China said it will keep intervening in its equity market to "look after" investors and has no intention of further devaluing the yuan. Mr Draghi said he's concerned about the outlook for Eurozone inflation.

Irish Independent

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