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    EUROSTOXX50: impact of yesterday’s events on 11.03.2016

    In general, financial markets positively reacted to yesterday’s decision by ECB to lower interest rates in Eurozone. The core interest rate was reduced by 0.05% to 0.00%, interest rate on deposits was lowered by 0.1% to -0.4%. Program of redemption of bonds was increased by 20 billion up to 80 billion euro per month, which was by 10 billion more than expected by market participants.

    After the release of this decision yesterday at 14:45 (GMT 2), Euro in the pair with the USD fell by 1.5% to 1.0825. At the same time, European stock indices rose in price. StoxxEurope600 rose by 2.5%, EuroStoxx50 rose by 108 points up to 3123.0, by 3.5%. Shares of the bank UniCredit SpA rose by 11%, Deutsche Bank – by 7%. The price of gold fell by 1.0% to 1238 USD per ounce.

    However, after the speech of Mario Draghi at the press-conference at 15:30 (GMT 2) the indices started to decline (the decline exceeded the previous rise). Mr Draghi said that additional incentive measures are not required in Eurozone in the near future.

    The pair EUR/USD rose from the lows by 395 points up to 1.1217. At the same time European and American stock indices rapidly fell.

    At the opening of today’s trading session world indices are growing, while American indices have almost returned to yesterday’s highs.

    Market started to realize what actually happened. Adopted measures including reduction of interest rates and increasing of the monthly asset repurchase have met market expectations. Moreover, the program of redemption of bonds will now include the bonds of non-banking corporations with the investment rating; the launch of TLTRO II was also announced (new round of targeted long-term refinancing operations). This measure shall support economic growth and inflation in Eurozone.

    However, according to Draghi, ECB is not planning to introduce further measures to stimulate economy. If the existing measures prove to be sufficient to support economy and inflation in Eurozone, European indices will continue to rise. The time will show.

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