The European Central Bank
The European Central Bank EPA - BORIS ROESSLER

ECB stimulus announcement boosts US stock market

Share Markets:

Investor sentiment lifted on Friday night, possibly in delayed reaction to Thursday's European Central Bank (ECB) stimulus announcement.

The US stockmarket gained ground, following on from strong gains in the European session.

The Dow rose 1.3%, the S&P 500 lifted 1.6% and the Nasdaq was up 1.9% for the session. Earlier the Euro Stoxx jumped 3.5% for the session.

The Australian market is expected to open higher this morning following offshore gains on Friday night.    

Interest Rates:

US government bond yields rose on Friday night, reflecting slower demand for safe haven treasuries as risk appetites lifted.

The US 10yr treasury yield rose from 1.93% to 1.98% - a six-week high. The 2yr yield rose from 0.93% to 0.96% - a two-month high. The curve steepened.

European bond yields retreated on Friday night, giving back some of the gains from the previous session, when ECB President Draghi had indicated he didn't anticipate further interest rate cuts.

Investors reassessed Thursday's monetary easing measures from the ECB, which were more stimulatory than what the market had anticipated.

Foreign Exchange:

The US dollar index (against a basket of currencies) finished a little softer as improved risk appetites boosted other currencies, including the Australian dollar.

AUD/USD rose from 0.7448 on Friday morning, to a high of 0.7587 early this morning (which was the highest since July 2015), to currently trade around 0.7547.

The Aussie dollar also gained ground against the other major currencies.

A reversal in risk appetites weighed on the Yen, so that AUD/JPY rose from 84.33 on Friday morning, to currently trade around 85.98.

The New Zealand dollar was also stronger against the US dollar, with NZD/USD hitting a high of 0.6774 on Saturday morning.

The Aussie dollar's outperformance, however, meant AUD/NZD strengthened on Friday, to trade around 1.1224 at the time of writing.

Commodities:

Commodity prices lifted on Friday night, boosted by improved risk appetites.

Australia: 

There was no data released locally on Friday.

China:

Industrial production rose 5.4% in January and February from a year earlier, down from a 6.1% increase in the year to December. This was the weakest growth in industrial production since March 2009 when the GFC impacted factory output in China.

Retail sales gained 10.2% in January and February from a year earlier, which was down from 10.7% in the year to December.

Chinese fixed asset investment rose 10.2% in January and February from a year earlier, down from 10.7% in the year to December.

New Zealand:

New Zealand's Performance of Manufacturing Index fell to 56 in February from a revised 58 in January.

The index dropped from a 15-month high in January but its level in the mid-50s suggests that expansion is still solid.

United Kingdom:

The trade deficit narrowed to £3.46bn in January, from a downwardly revised deficit of £3.70bn in December (previously reported as a smaller deficit of £2.71bn).

United States:

Import prices continued to fall, although the pace of decline eased slightly due to a smaller appreciation in the US dollar and less steep declines in the oil price in February. Import prices fell 0.3% in February, after falling 1.0% in January.

It was the eighth consecutive monthly decline in import prices. For the year to February, import prices are down 6.1%, up from a decline of 6.3% in the year to January.



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