Stocks in New York and Europe Jolt Higher on ECB Stimulus Plan

Nichole Harper
22 Jan, 2015
New York City

Market indexes in New York rose and in Europe gained after the ECB followed through its promise of large and unprecedented bond buying program to lift inflation and break the economic stagnation.

[R]12:55 PM New York – Market indexes in New York rose and in Europe gained after the ECB followed through its promise of large and unprecedented bond buying program to lift inflation and break the economic stagnation.[/R]

U.S. market indexes rebounded after new measures were announced to stimulate euro zone economies.

European Central Bank followed through its widely advertised and anticipated plan to provide additional stimulus. The latest plan from the central bank will acquire government bonds of as much as 60 billion euros a month till September 2016.

ECB President Mario Draghi also said in a statement that the bank will limit the purchase of individual bond at 25% and limit to 33% of any country outstanding bonds and the ECB will not have a preferred bond holder status.

The decision also highlighted the struggle in the euro zone and it took nearly six weeks of intense negotiations to work out details of the agreement and over German bankers’ resistance.

The European Central Bank will share in risk with national country bank in the event of a default addressing the prime concern of German lawmakers and Bundesbank to prevent from transferring risks to wealthy countries in the union.

The Department of Labor said seasonally adjusted weekly jobless claims declined 10,000 to 307,000 from the previous week revised claims of 317,000.

On Wall Street trading, Tollbooth Strategy Index jumped 1.2% or 122.79 to 10,012.60.

S&P 500 index increased 11.39 or 0.6% to 2,043.55 and the Nasdaq Composite Index gained 39.33 or 0.8% to 4,706.52.

U.S. Movers

American Express Company ((AXP)) declined 3.7% or $3.21 to $84.46 after the consumer lender reported total revenues in the first-quarter ending in December jumped 7% to $9.11 billion from a year ago period.

Net income in the quarter climbed 11% to $1.4 billion or $1.39 a diluted share compared to $1.3 billion or $1.21 from the same quarter last year.

Travelers Companies Inc ((TRV)) gained 1.5% or $1.63 to $106.64 after the insurance company stated said total revenues in the fourth-quarter ending in December rose 0.6% to $6.78 billion from a year ago period.

Net income in the quarter jumped 5.3% to $1.04 billion or $3.11 a diluted share compared to $988 million or $2.70 from the same quarter last year.

Verizon Communications Inc ((VZ)) dropped 2.5% or $1.22 to $47.04 after the wireless communications service provider reported revenues in the fourth-quarter ending in December jumped 6.8% to $33.19 billion from a year ago period.

Net in the quarter swung to a loss of $2.15 billion or 54 cents a diluted share compared to profit of $7.92 billion or $1.76 from the same quarter last year.

European Markets

European markets advanced after the European Central Bank announced a plan to purchase of €60 billion of bonds till September.

The decision was widely expected and markets in the euro zone scaled higher on the hopes that the measure will avoid deflation trend in many parts of Europe.

In London trading, FTSE 100 index gained 0.5% or 34.52 to 6,762.56 and in Frankfurt the DAX index increased 0.5% or 55.71 to 10,354.94.

In Paris, CAC 40 index jumped 0.9% or 42.15 to 4,526.97.

Atrium European Real Estate Limited fell 0.9% to €4.05 after the Israel-based Gazit Globe Ltd real estate developer agreed to acquire 13.9% stake for about €229 million or $266 million in the company.

Separately today Atrium European Real Estate agreed to acquire 75% stake in Czech Republic-based Arkády Pankrác shopping centre for about €162 million or $188 million from Unibail-Rodamco S.E.

Senvion SE halted at €143.15 after the German unit of India-based Suzlon Energy Ltd agreed to be acquired by U.S.-based Centerbridge Partners, L.P. for about €1 billion or $1.16 billion in cash.

Asian Markets

Japan stocks closed down and the yen declined 0.2% ahead of bond purchase plan announcement from the European Central Bank. Softbank Corp rose following a surge in its U.S. unit Sprint Corp.

Stocks in Tokyo declined a day after Bank of Japan estimated higher growth, lag in reaching its inflation target and reaffirmed its bond purchase program.

Central bank in Canada also lowered its interest rate unexpectedly and Bank of England passed unanimously to keep rates on hold.

Central banks Japan, U.S. and Europe are looking for ways to revive inflation and accelerate economic growth by supporting policies that revive aggregate demand and also weaken their currencies.

China has been trimming lending growth to cut down wasteful economic growth and India took advantage of dramatic plunge in oil price to lower interest rate for the first time after two years as elevated inflation over 6% turn lower.

The Nikkei 225 Stock Average gained 48.54 or 0.3% to 17,329.02 and the broader Topix index slid 1.18 to 1,389.43.

The yen declined 0.2% to close at 118.19 against one dollar after rising as much as 0.7% in yesterday’s trading.

In Mumbai trading, Sensex Index advanced 117.16 or 0.4% to close at 29,006.02. The CNX Nifty added 31.90 or 0.4% to 8,761.40.

Mumbai market indexes extended rally for the third day this week and rupee trended higher as global investors continue to increase purchases of bonds and stocks in India.

Indian rupee closed at 61.70 against one dollar.

L&T Finance Holdings Limited jumped 3.1% to Rs 71.65 after the financial service provider said net in the third-quarter soared65.56% to Rs 181.60 crore.

Net sales climbed 23.19% to Rs 1,611.52 crore.

Raymond Limited declined 1.8% to Rs 521.40 after the branded apparel maker reported net in the third-quarter fell 1.4% to Rs 56.07 crore.

Net sales increased 13.9% to Rs 1,396.26 crore.

Suzlon Energy Ltd tumbled 7.5% to Rs 15.91 after the world''''s fifth largest wind turbine maker agreed to sell its German unit Senvion SE to U.S.-based Centerbridge Partners for about Rs 7,154 crore or $1.16 billion.