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