ECB adds half a trillion euros in stimulus

Though the program was extended by nine months, the monthly amount of bonds it will buy as part of its stimulus will after March be reduced to 60 billion euros ($64 billion) from 80 billion euros.

The ECB added that it was willing to increase the size of its buying programmes, saying: “If, in the meantime, the outlook becomes less favourable or if financial conditions become inconsistent with further progress towards a sustained adjustment of the path of inflation, the Governing Council intends to increase the programme in terms of size and/or duration”.

The ECB also kept its main refinancing rate unchanged at zero and the deposit rate at minus 0.4%.

The 10-year yield held below the 2.492 percent level reached on December 1, which was its highest since July 2015, according to Reuters data.

ANALYST’S TAKE: “With less than four months until the expiry of the current QE program, the market is looking to the European Central Bank to inject another boost to the market by extending the program beyond March”, said Jingyi Pan, a market strategist at IG in Singapore.

The dollar rose broadly on Friday as USA bond yields rose, while the euro sank after the European Central Bank’s decision to extend its debt-buying program even as it cut the size of its purchases disappointed currency bulls.

“It is highly possible that euro could trade as low as parity with the dollar early next year”. The Russell 2000 index of small-company stocks jumped 1.6 percent, to 1,386.37.

Ironically, the collapse of Italy’s government this week may hasten instead of delay the recapitalisation of ailing lender Monte dei Paschi, much to the ECB’s relief.

“The short-term market is still short euros and I think they might be nervous – time to square up a little bit more ahead of the European Central Bank meeting”, said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in NY.

“Investments and policies that have done well in a low-rate, low-growth world have reached their peak”.

The iShares Nasdaq Biotechnology ETF (IBB) fell 2.9 percent in its worst day since October 11. Indexes in most Southeast Asian countries also rose but South Korea’s Kospi bucked the trend, dipping 0.3 percent to 2,023.35 and Hong Kong’s Hang Seng index fell 0.4 percent to 22,760.60. Chinese shares.CSI300 gained 0.5 percent. Even the prospect of a nationalisation, potentially as early as this weekend, isn’t spooking the markets as it may avoid retail bondholders having to take any losses. Brent was up 0.66 percent, to $53.35 a barrel.

The euro was little changed at $1.0719 after slipping 0.5 percent overnight.

NEW YORK, Dec 8 (Reuters) – Bond yields rose and the euro dipped on Thursday after the European Central Bank said it would slow its stimulus program from April, while Wall Street struggled to extend the previous session’s records. We could also see another upward move in stocks after the Dow, which has outperformed the more tech heavy S&P 500, hit another record high on Tuesday. “So far we’ve seen that in the short-term the response to these uncertainties has been more muted than people expected”, reports the Chicago Tribune. Costco rose 4.2 percent after the warehouse club retailer reported a quarterly profit that beat analysts’ expectations.