Economy

ECB Policymakers split over wording of stimulus end, rate hike

ECB Policymakers split over wording of stimulus end, rate hike

The euro recovered some ground against the dollar, a day after the European Central Bank signaled it would keep interest rates at record lows into the summer of 2019, prompting the common currency to fall almost 2 percent drop.

The ECB plans to halve the monthly net asset purchase to 15 billion euros (17.4 billion US dollars) from October, and to end it by December.

The ECB appeared to balance the phase-out of the stimulus programme with the pledge that the withdrawal of support for the economy would be gradual, and that interest rates could stay low for longer than the second quarter of next year if needed.

The common currency, however, fell sharply after the European Central Bank indicated that any interest rate increases in the Euro-area remain a very long way off.

The dollar had risen after the Fed's move, then faded in Asia and was still falling as the euro pushed above $1.1820 before the European Central Bank met. The dollar index, which tracks it again six top currencies, also erased all of this week's gains.

Ten-year government bond yields in Germany, the euro zone benchmark, fell around 6 basis points to 0.422 percent compared to Wednesday's close.

Woods fires worst ever US Open score
Open was in 2008 - when he last won a major championship. "My game plan was not to make any "others" and I made three of them". But if you think Koepka is going to shy away from the challenge of becoming the first back-to-back victor of the U.S.

Oil markets edged up, despite the strengthening dollar and fears that OPEC countries could decide to increase output at a meeting next week.

The biggest beneficiaries were interest-rate sensitive sectors such as autos .SXAP which rose 1.8 percent, while shares in utilities rose 0.6 percent SX86P .

Benefiting from the ECB's decision were stock markets on both sides of the Atlantic.

The rate hike on Wednesday was the seventh in this cycle and effectively marked a shift to a neutral stance in which the policy rate matches inflation at just under 2 percent, leaving zero "real" accommodation.

"With the European Central Bank signalling that interest rates are unlikely to budge until the autumn of next year, investors' immediate focus seems to be on this forward guidance for interest rates, rather than the end of QE, which is reflected in the sharp drop in the euro".

"Uncertainties related to global factors, including the threat of increased protectionism, have become more prominent, the risk of persistent, heightened financial market volatility warrants monitoring", said Mr Draghi. Japan's Nikkei 225 finished 0.5 percent higher at 22,851.75 but South Korea's Kospi retreated 0.8 percent to 2,404.04.

Holly Sonders recaps Day 2 of the U.S. Open
He joined Fleetwood at five shots behind. "I'm 10-over-par", he said after missing the cut by 10 strokes at Shinnecock Hills. Much like two weeks ago at the Memorial Tournament, Woods hit plenty of good shots but was unable to get any putts to drop.

Technology stocks were the biggest advancers, with Facebook and Alphabet leading the pack.

Italian 10-year yields were down around 2 bps at 2.80 percent IT10YT=RR .

The Hang Seng index ended 0.9 per cent lower at 30,440.17 points, while the China Enterprises Index lost 0.7 per cent to 11,950.70 points.

President Donald Trump approved tariffs on about $50 billion of Chinese goods, people familiar with the decision said, as the USA ratchets up its trade fight with Beijing.

TARIFFS: Trump approved a plan to impose punishing tariffs on tens of billions of dollars of Chinese goods as early as Friday.

The ECB's bond purchases were a way of pushing newly created money into the economy. Traders are anxious about China, Mexico and other countries curbing demand for United States grain and soy exports.

Trump set to meet with Kim one-on-one, sets early departure
Kim called the sit-down a "good prelude for peace" and Trump pledged that "working together we will get it taken care of". Earlier today, Trump met with Singaporean Prime Minister Lee Hsien Loong at the Istana house.

Futures pointed to a small opening decline for the S&P 500 while stocks were mixed in Asia-Pacific trading.


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