DAX 30 Up as ECB Extends QE to December 2017 at Earliest

on Dec 8, 2016

Today’s ECB meeting has just led to the announcement that the European Central Bank will extend its programme of asset purchases through to the end of 2017, rather than just an additional 6 months into September, which had been the widely anticipated outcome. However, markets were thrown a curve-ball with the news that the monthly 80 billion euro QE injection will be tapered down to 60 billion euro from April 2017.

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Draghi’s traditional press conference is now underway and it will be interesting to see whether markets interpret the somewhat surprising twist as less or more than had been forecast. While the period has been extended by three additional months, the pace has been dropped slightly. Overall, the total value of the asset purchases will be more than markets had been hoped for but slightly more thinly spread.

ECB President Mario Draghi denied the interpretation that the reduction post-March equated to ‘tapering’, commenting “There is no question about tapering. Tapering has not been discussed today.”
Rather, the reduction is explained as the result of the deflation risk considered to have been present within the Eurozone having ‘largely disappeared’. Draghi also said that the policy announced should tell markets that ECB would remain active in its policy “for a long time”. While asset buying will, barring any major and unforeseen turn of events, continue until the end of 2017 at least, the current position is that it will subsequently be extended for as long as necessary. Draghi also left the door open for a return to an 80 billion per euro QE injection if 60 billion is not deemed sufficient before or after March next year.

The DAX 30 is currently holding a 1.51% gain with the ECB policy announcement not appearing to have led to a negative reaction as yet. Commerzbank has gained 5.09% today with Deutsche Bank 2.53% to the good. The other big gainer today has been ProSiebenSat.1 Media, which is up 4.46%. The mass media company yesterday announced that Dr. Jan Kemper has been appointed to the company’s board as CFO as of June 2017. Kemper is currently VP of finance at online retailer Zalando and successfully managed the company’s IPO. Thomas Ebeling, chairman of the executive board, commented on the appointment:
_“On behalf of the entire board, I am pleased to see Jan Kemper join ProSiebenSat.1. I am delighted that we are bringing in a renowned finance expert and manager, who feels at home in a dynamic and fast-paced market”._
Lufthansa and Deutsche Telekom are also having strong sessions on Thursday, up 2.67% and 2.62% while the automotive sector continues its strong week with BMW up 2.44%, Daimler 2.12% and Volkswagen 1.18%. Affiliated Continental, which manufactures tyres, is up 2.07%. Steel maker and elevator company Thyssenkrupp is up 3.28% today despite an announcement from the company today that it had been the victim of a “massive” cyber attack earlier in the year. The breaches, attributed to advanced hackers based in south east Asia, are thought to have been motivated by the aim of industrial espionage.
The only big fallers today have been energy utilities Eon and RWE, which are down 2.24% and 4.7% respectively.


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