Global markets rally after Draghi comments

By Gautam Broker, Research Analyst at CNBC-TV18
 
Global markets enthused by Draghi speak (at an investment conference in London) on Thursday.

European Central Bank (ECB) President Mario Draghi says “ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”

Draghi also hints at bond buying; Spain and Italy's 10-year bond yields saw a fall of 40 basis points yesterday.

He says, “If sovereign premia hamper monetary policy transmission channels, they come within our mandate. Political capital invested in Euro should not be under-estimated."

Draghi in his final comments says, “I think I will stop here. I think my assessment was candid and frank enough."

Market was positive post Draghi comments but some still skeptical about Securities Markets Programme (SMP) due to ECB internal opposition.

Host of US data too was largely supportive for US markets.

US Initial jobless claims came in at 3,53,000, which was better than consensus estimate of 3,70,000, and 3,88,000 last week

US durable goods orders for June rose 1.6% MoM as against consensus of 0.6%; but ex-transportation was negative 1.1% MoM

Pending home sales for June were slightly weak at -1.4% MoM, but May was exceptionally strong at +5.4% MoM

Facebook was down 11% post closing as it reported loss of USD 157 million in Q2

US GDP for the second quarter of CY12 will be announced today; analysts expect between +1.2% and 1.5% as against 1.9% seen in Q1  

US markets at close: Dow Jones gained 1.7% at 12,887.9. S&P 500 Index rose 1.7% to 1,360 and Nasdaq was up 1.4%

European markets at close: DAX shot up 2.8% and CAC jumped 4.1%. FTSE was up 1.4%. Spain surged 6.1% and Italy spiked 5.6%

Asia Today

Kospi gained 1.8% and Hang Seng rose 1.6%

Taiwan Weighted went up 1.3% and Nikkei was up 1.2%

Straits Times moved up 0.4% and Shanghai gained just 0.2%

SGX Nifty rallied 0.8% at 5130

Currencies

Euro hit a high of 1.233 against the US dollar post Draghi comments

It lost some steam today morning; it was at 1.227 to the dollar today morning

Dollar subdued on Euro strength and ahead of Q2 GDP today

Dollar index is currently below 83 at 82.85

Commodities

Commodities gained post Draghi comments

Brent crude settled up around 1% at USD 105.4 a barrel

WTI crude rose 0.5% to USD 89.4 a barrel

LME Copper was up 0.3% at USD 7470/tonne

Gold went up 0.5% to USD 1615 an ounce

Raw Sugar tanked 4.5% at 22.5 cents

What to watch out for

German CPI

US Q2 GDP

US Personal Expenditure

US Consumer Confidence