Market News & Analysis
Equity Handover: Draghi’s parting shot could easily miss
Ken Odeluga June 18, 2019 3:45 PM
Stock market snapshot as of [18/6/2019 3:19 PM]
- If European Central Bank president Mario Draghi really is as resigned as he seems, to being remembered just for policy easing, Tuesday’s stock market rally is a fair parting shot
- His comments at the ECB’s Forum on Central Banking in Portugal look responsible for hauling sentiment out of the doldrums and setting major European indices on course for gains this week
- Noting that pressures on growth were “persisting”, Draghi indicated that “additional stimulus may be needed” if the economic outlook doesn’t improve, and that rate cuts remain “part of our tools”
- His words reinvigorated Wall Street futures enabling Dow Jones, S&P, Nasdaq and Russell indices to open firm and reach six-week highs
- For now, investors aren’t looking too closely under the hood. Draghi’s scheduled ECB departure, by the end of October, adds policy uncertainty linked to his successor. As well, any easing signalled by the Federal Reserve on Wednesday would weaken possible ECB accommodation, which is pretty accommodative already, to say the least
- All European industrial sectors rally hard, but utilities advance as much as materials, rising over 2%. Such ‘safe-haven’ plays betray that a fair amount of caution accompanies Tuesday’s cheer
- U.S. techs continue a solid advance that began on Monday with the FANG notably buoyed. However, the top technology gainers are tariff-hit chip and hardware shares that could benefit from lower borrowing costs. Broadcom, Nvidia, Texas Instruments and Qualcomm surge 3%-6% higher
Upcoming corporate highlights
BMO: before market open
Upcoming economic highlights
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.