Stocks gain as ECB signals more stimulus, China cuts rates further
23 Oct 2015
Asian markets joined a global stocks rally on Friday after the European Central Bank signaled its readiness to inject more stimulus, even as European stocks extended gains in afternoon trade as China's central bank cut interest rates for the sixth time since November.
ECB's decision to keep interest rates low also helped the dollar scale a fresh two-month peak against the euro.
ECB president Mario Draghi said the bank's 1 trillion euro bond-buying programme would need to be "re-examined" in December and that the governing council stands ready to use all available instruments within its mandate.
The suggestion that the quantitative easing could be extended beyond September 2016, prompted Asia stocks to jump, while China's rate cut and positive tech earnings helped US stocks rally sharply higher on Friday.
The STOXX 600 shot up 1.9 per cent after opened the session in positive territory. Sentiment had been buoyed after the European Central Bank (ECB) signaled on Thursday its willingness to extend its bond-buying programme.
Britain's FTSE 100 was expected to open up 0.4 per cent, Germany's DAX 1.3 per cent and France's CAC 40 as much as 1.2 per cent.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 1.7 per cent, and set for a gain of around 1 per cent for the week.
Japan's Nikkei stock index closed 2.1 per cent higher, ending the week up 2.9 per cent.
The Shanghai Composite index added 1.4 per cent, on track for a weekly gain of 0.7 per cent.
The People's Bank of China (PBoC) lowered its one-year benchmark lending rate by 25 basis points to 4.35 per cent, effective 24 October, giving basic resource stocks a boost with the sector rallying strongly.
Glencore and Fresnillo were over 3.5 per cent higher. Auto stocks were also higher with Porsche being one of the top performers in the sector. Germany's BMW and Daimler both were sharply higher.
However, oil prices sank on the China rate news, with Brent standing at $47.70 a barrel, while US crude slumped, trading at $44.51.