Stocks pared gains while the euro recouped losses versus the dollar amid concern that the European Central Bank?s expanded stimulus won?t be enough to jumpstart growth in the region.
The Stoxx Europe 600 erased almost all of a 2 percent gain while the euro traded higher versus the dollar than its level before the ECB announced cuts to key interest rates and increased the scope of its bond-buying program that exceeded market expectations. U.S. stock futures trimmed an advance amid concern the audacious package may signal increasing concern about persistent weakness in consumer prices and a Chinese slowdown.
?ECB members have been saying negative interest rates are working but if they were then why did they have to do this bazooka they just did,? Andrew Brenner, head of international fixed income at National Alliance Capital Markets in New York, said by phone. ?European GDP growth sucks and the fact they?re doing what they are now means they came to that same conclusion, they?ve realized that negative rates don?t work and it doesn?t help the economy.?
The expansion of stimulus delivered the most audacious package yet from the ECB as it combats persistent weakness in consumer prices and sluggish growth. The Federal Reserve meets next week as it considers whether the U.S. economy is strong enough to withstand higher rates even as Thursday?s moves add to a wave of global monetary stimulus this year that includes a lowering of Chinese lenders? reserve requirements and Japan?s introduction of a negative interest rate.
Stocks Pare Gains, Euro Cuts Losses as Draghi’s ECB Boost Fades – Bloomberg