There is nothing like central bank easing to get investors flocking to equities. As expected the ECB moved on Thursday to cut interest rates and also announced additional stimulus measures. The ECB's main lending rate was reduced from 0.25% to 0.15%, and they also introduced a negative deposit rate on cash that banks have parked with the central bank. The goal is to incentivize more bank lending, aka. increase the money supply. The ECB also alluded to preparations for direct purchases of loans and made clear that the door remained open for additional measures to come if needed.
This took equity prices around the globe to new highs. The Dow and S&P rallied into new-high territory. The strongest gains came from the Russell 2000 small-cap index which traded up almost 2%.
European stocks surged to a new post-recession high.
News of easing helped stem the precipitous fall in gold prices over the last two ... Log in or subscribe to continue reading.
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