Mario Draghi – Veni, Vidi, Vici – The trouble is as far as equities are concerned he didn’t bloody well conquer!
The day was full of expectations. Markets had priced in what they wanted out of this meeting but they got what Draghi wanted the market to get – exactly as our Chief economist Simon French predicted – deposit rate cut by 10 basis points to -0.3%. The facility of €1.1 trillion (circa €60 billion a month) will remain, with no official increase in QE. There will be just an extension of the facility to the end of March 2017 from the end of September 2016. In other words equity geeks were disappointed. They wanted more and that may have been priced in. This news was good for UK exports, where we already do proportionately far too much business. The Euro eased against the Pound from 70 to n72 cents which is measurable.
The FTSE took a dive on this news from about 6441 down to 6350 and at 2.30pm, it has settled at 6380 – down just 40 on the day. To say that activity is sepulchral is an understatement. The markets seems to have a serious dose constipation rather than looking for a Santa Rally. After a decent week drugs – Shire, Glaxo and Astra are down by about 1%. Media, which had also done well earlier in the week, looked moribund – virtually unchanged. Next, Whitbread attempted to show a bit of form, but probably got boxed in on the rails. Mining stocks were very mixed with Anglo American +1.5% having been down that amount early on. BHP was down 1% and Glencore was +0.4% to the good at 94.07p. Oils were down an average of 0.75% on the day. Most investors frankly are waiting for Payroll data at 1.30pm tomorrow – expecting +190k, which should send a message to Janet Yellen to say “the time has come the walrus said to talk of many things…..