ECB rate cut has mixed impact on Asian stocks

<p>The Nikkei and the Hang Seng index were both down.</p>

Asian stocks had a mixed reaction today (June 6th) on the back of yesterday's stimulus measures announced by the European Central Bank (ECB).

The ECB enforced a cut from 0.25 per cent to 0.15 per cent in its main interest rate after falling inflation pressurised the bank into action.

Further stimulus measures were also revealed by ECB leader Mario Draghi, who stated that the bank will continue to take action to boost the eurozone's economic recovery and more stimulus packages could be unveiled in the coming months. Meanwhile, the Bank of England's Monetary Policy Committee held interest rates at a UK record low rate of 0.5 per cent for another month.

Although Japan, Hong Kong and Australian stocks were all up at the start of the day following the ECB news, all of these markets erased their gains over the course of the session.

Index drops

The Nikkei ended 0.01 per cent down for the day to end the week on a slight low, while the Hang Seng index was 0.69 per cent lower when the index closed for the day.

As well as the reduction in main interest rates to 0.15 per cent, the ECB cut the deposit rate for banks to -0.1 per cent from zero per cent.

CMC Markets analyst Max Ho stated that the ECB's moves were "well-telegraphed". He told BBC News: "We witnessed history in the making. While this move to cut deposit rates to a negative is considered to be bold and unprecedented, some observers are not convinced that it will have a significant impact on existing bank lending."

The euro hit a four-month low yesterday after the ECB announced its stimulus measures, dropping by 0.3 per cent for the day to $1.3563. However, the FTSE Eurofirst 300 was up 0.6 per cent at 1,381.90.

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