European Shares Surge As Draghi Declares Stimulus Plan A Success

Frankfurt (Alliance News) - German shares led a rebound in European stocks on Wednesday as ...

Alliance News 11 March, 2015 | 4:11PM
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Frankfurt (Alliance News) - German shares led a rebound in European stocks on Wednesday as European Central Bank chief Mario Draghi declared the bank's 1.1-trillion-euro (1.2-trillion-dollar) asset-buying programme a success.

Draghi sees the stimulus programme, which was launched on Monday, as having already started to work its way through to the real economy. One of the results has been heading off the threat of contagion from the current Greek financial crisis.

"Our monetary policy is certainly supporting the recovery," he told a conference in Frankfurt.

The surge in European shares came as the ECB's landmark stimulus plans helped propel Frankfurt's main DAX index from one record high to another.

The eurozone's blue-chip EuroStoxx index was up about 2% as the trading day came to an end, with investors shrugging off worries that the US Federal Reserve could raise interest rates and concerns about the threat of a financial meltdown engulfing Greece.

Shares on Wall Street also pulled backed from Tuesday's heavy losses, with the Dow Jones Industrial Average edging 0.3% higher as Wednesday's trading session in Europe came to an end.

The gain in stocks on Wall Street came after the Dow closed 1.8% down on Tuesday amid concerns about the US central bank's plans to tighten monetary policy.

Spearheading the rise in European stocks was a 2.5% jump in the DAX to a record high of 11,786 points as a weak euro drove export stocks.

The gains in the DAX and eurozone equities came three days after the ECB began buying government and private sector assets under its new quantitative easing programme.

"We saw a further fall in the sovereign yields of Portugal and other formerly distressed countries in spite of the renewed Greek crisis," said Draghi.

"This suggests that the asset purchase programme may be shielding euro area countries from contagion."

The ECB's current push to boost growth and raise inflationary pressures underlines the divergent growth paths between the eurozone and the US.

The ECB's benchmark refinancing rate has been on hold at an historic low of 0.05% since September, while the Washington-based Federal Reserve is moving toward dismantling its asset-buying programme and hike rates in the face of a strengthening US economy.

The divergent paths taken by the US and eurozone monetary authorities once again resulted in the euro coming under renewed pressure, with the European common currency tumbling by 0.9% to 1.0590 dollars in late afternoon forex trading in Europe.

The euro has slumped by about 23% since May, when it was heading toward 1.40 dollars.

Copyright dpa

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