Mario Draghi holds rates steady but seems open to more stimulus while Janet Yellen reiterates supportive Federal Reserve view
Stock markets around the world jumped yesterday, lifted by supportive comments from central banks in both Europe and the United States.
European shares climbed 1.1 per cent after European Central Bank President Mario Draghi was seen as opening the door to more stimulus measures in June.
The ECB stance pushed the euro down 0.3 per cent against the dollar. It previously rose to its highest level since November 2011.
The yen rose slightly against the dollar.
In the United States, Federal Reserve Chair Janet Yellen, speaking to the Senate Budget Committee, repeated a statement she made on Wednesday that she expects improved year-over-year growth, though weakness in the housing sector could undermine that forecast.
Her comments were seen as indicating continued support for the economy.
“Given the need to stimulate the economy, the European Central Bank may take some pages out of the US play-book and become more aggressive, which should continue to lift European shares or companies tied to Europe,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc. in Raleigh, North Carolina.
“So long as the Fed continues to take a wait-and-see approach for removing stimulus, that should provide a good backdrop for investments.”
The Dow Jones industrial average was up 94.18 points, or 0.57 per cent, at 16,612.72.
The Standard & Poor’s 500 Index was up 8.29 points, or 0.44 per cent, at 1,886.50.
The Nasdaq Composite Index was up 28.79 points, or 0.71 per cent, at 4,096.47.
The MSCI International ACWI Price Index rose 0.5 per cent.
The 10-year US Treasury yield was up 8/32, the yield at 2.591 per cent.
The tense situation in the Ukraine remained in view after pro-Russian separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on self-rule, declaring they would go ahead on Sunday with a vote that could lead to war.
Gold, viewed as a safe-haven asset, was flat on the day after dropping more than 1.5 per cent over the previous two sessions. Copper was also flat.
In Asia, China’s exports and imports returned to slight growth in April after a surprise fall in March, offering signs that Beijing’s use of targeted policy measures to underpin growth may be starting to stabilize the economy.
US crude futures fell 0.6 per cent and Brent crude was off 0.1 per cent. Traders continued to watch the situation in Ukraine, as well as Chinese crude imports, which jumped to a record high.