Global stocks rose Friday, led by Europe, as investors reassessed an unexpectedly wide array of stimulus measures announced a day earlier by the European Central Bank.
Germany’s DAX gained 2.6% to 9,748.72 and France’s CAC 40 advanced 2.6% to 4,462.18. Britain’s FTSE 100 rose 1.3% to 6,113.20. Wall Street was also set to begin on a positive note with Dow futures up 0.8% and S&P futures 0.9% higher.
Stocks had initially fallen on comments by ECB chief Mario Draghi on Thursday that underscored the weakness of the 19-country eurozone economy and the desperation of monetary authorities to act. But they rebounded on Friday as investors digested the raft of measures announced. They included three interest rate cuts, loans to banks, and an expansion to a bond-buying stimulus program. Shares in banks, which will be supported by the ECB loans, were among the biggest gainers on Friday.
See: European Central Bank surprises with strong stimulus action
“Running out of grenades isn’t a bad thing,” IG market strategist Evan Lucas said in a commentary, referring to the conviction among some economists that the ECB has run out of further ammunition to boost the economy. He added, “Draghi mainly met expectations and has publicly stated that rates are now going to be rooted to these level for years. Equities will ultimately win out with policy that accommodative.”
Japan’s Nikkei 225 recovered from earlier losses, gaining 0.5% to 16,938.87. South Korea’s Kospi edged up 0.1% to 1,971.41 and Hong Kong’s Hang Seng index was up 1.1% to 20,199.60. Australia’s S&P/ASX 200 gained 0.3% to 5,166.40 while the Shanghai Composite Index in mainland China finished up 0.2% at 2,810.31. Shares in Southeast Asia were mostly higher.
Crude prices rose after the International Energy Agency said “there are signs that prices might have bottomed out.” Benchmark U.S. crude added 88 cents to US$38.72 per barrel in electronic trading on the New York Mercantile Exchange. The contract finished 45 cents lower on Thursday. Brent crude, which is used to price international oils, gained 68 cents at US$40.73 a barrel.
The U.S. dollar strengthened to 113.76 yen from 113.22 yen while the euro fell to US$1.1108 from US$1.1178.