Stocks open higher after solid jobs report; oil price sinks

The euro held most of its gains today as the European Central Bank’s increased economic stimulus fell well short of market expectations.

The ECB cut its deposit rate by 0.1 percentage points to -0.3 percent, charging banks more for parking cash with the central bank and said it would announce more easing measures at its 1330 GMT press conference.

“The cut in the ECB’s deposit rate from -0.2% to -0.3% comes as a bit of a relief after incorrect last minute reports (by some media) that it had left rates unchanged”, said Jonathan Loynes, chief European economist at Capital Economics.

Stock markets across Asia declined in response to comments by both Janet Yellen and Mario Draghi.

“Financial markets were expecting the European Central Bank to do “whatever it takes” to stimulate inflation, and instead the European Central Bank did “maybe what it’ll take” to stimulate inflation”, said Guy LeBas, head of fixed income at Janney Montgomery Scott.

Stimulus hopes were stoked again on Wednesday by news that eurozone inflation languished at 0.1 per cent in November – far lower than the ECB’s official 2.0-per cent target. The Nasdaq composite fell 1.7 percent to 5,037.53.

“The euro’s adjustment higher is not yet complete and even a strong USA payrolls number exceeding consensus should not put euro under meaningful pressure”, Morgan Stanley said in a note.

He added that the decision to expand the pool of assets available to buy local government debt only reinforces that perception but in reality was probably the only option available to policymakers if they wanted to stretch out the duration of the programme until March 2017 to the tune of €60bn a month. “If an investor only makes his portfolio based on central bank policy, of course there is a disappointment, but there is also a big part of the market which is investing on fundamental data and from this perspective I must say I’m not totally disappointed”. Market expectations had been sky high ahead of the meeting after ECB President Mario Draghi and other executive board members had, in a number of speeches since October, dropped hints that more stimulus was urgently needed.

Oil prices rose Friday amid OPEC’s policy meeting in Vienna, where the cartel appears on course to maintain crude production levels despite a recent plunge to underneath $40 per barrel.

Now it’s the U.S. Federal Reserve’s turn to decide.

The Euro jumped over three percent at one stage and bond yields surged. The stock had risen 7 percent Thursday.