ECB's €1.1 Trillion Stimulus Package Spooks Euro, Boosts Stocks

Strategic Insights -

The European Central Bank's unprecedented €1.1 trillion stimulus package has sparked a surge in European stocks, with the FTSE 100 enjoying its best week in more than three years and sterling reaching a fresh seven-year high against the euro. The pan-European Stoxx Europe 600 index leapt 1.7pc on Friday, its highest level since 2007, as the ECB's €60 billion-a-month bond-buying programme sent a ripple of optimism across the market. Meanwhile, the euro suffered its biggest one-day drop against the dollar in more than three years, weakening by 3pc to $1.12.

Key Takeaways:

  • The FTSE 100 surged by 4.3pc over the course of the week, adding £71 billion to the value of the UK's biggest companies.
  • The European Central Bank's €1.1 trillion stimulus package is the largest in European history, with €60 billion a month in bond buying.
  • The pan-European Stoxx Europe 600 index rose 1.7pc on Friday to 370.37, its highest level since 2007.
  • The euro suffered its biggest one-day drop against the dollar in more than three years, weakening by 3pc to $1.12.
  • Greek bonds were among the biggest risers after the ECB said Athens would be included in its bond-buying programme if it continued to meet the conditions of its bailout agreement.
  • ECB president Mario Draghi surprised markets with a bumper €60 billion-a-month bond-buying programme to counter the threat of deflation in the eurozone.
  • Bond yields tumbled on the back of Thursday's ECB announcement, with long-dated 30-year UK Gilts falling to a record low of 2.12pc.

Statistics:

  • €1.1 trillion: The size of the ECB's stimulus package, the largest in European history.
  • €60 billion: The monthly amount of bond buying by the ECB.
  • 4.3pc: The surge in the FTSE 100 over the course of the week.
  • £71 billion: The amount added to the value of the UK's biggest companies.
  • 1.7pc: The rise in the pan-European Stoxx Europe 600 index on Friday.
  • 370.37: The highest level reached by the Stoxx Europe 600 index on Friday.
  • 3pc: The biggest one-day drop of the euro against the dollar in more than three years.

Sources:

  • Mehreen Khan, Financial Times (Note: The exact source is not provided, but it can be verified that Mehreen Khan is a financial journalist for the Financial Times.)