EuropeanSep 4 2014

Eurozone shares rise on the back of Draghi’s pledge

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Eurozone equities have been boosted today following the decision from the European Central Bank (ECB) to cut its base interest rate and president Mario Draghi’s pledge to buy asset backed securities (ABS).

At the monthly ECB meeting today, the central bank lowered its base rate from 0.15 per cent to 0.05 per cent and its deposit rate for banks from -0.1 per cent to -0.2 per cent.

The surprise rate cut sent the euro tumbling against all major currencies and sent eurozone stock markets soaring.

The Eurostoxx 50 index has risen by nearly 2 per cent so far today, while there are similar rises across bourses in

The monetary stimulus from Mr Draghi has also sent eurozone government bonds rallying and caused Ireland to become the latest eurozone country to see its 2 year bond yield drop into negative territory.

The rally in stocks and bonds was extended by Mr Draghi’s press conference, in which he outlined his plan to buy asset-backed securities from private lenders, beginning in October.

The ECB president also left the possibility of outright quantitative easing (QE), buying of eurozone government debt, on the table, saying there was support for such a move within the ECB.