European Central Bank expands QE program to $2.4 trillion, pledges support until December 2017

“However, the bank is going to reduce their firepower after March and will only be purchasing 60 billion”.

When you add it up, the European Central Bank will commit a total of 780 billion euros to its stimulus program next year, up from 240 billion euros had it not extended the buying beyond March 2017. Both the deposit rate and the lending rate were left unchanged at -0.4 percent and 0.25 percent, respectively.

The S&P 500 index climbed 0.2 percent to 2,246.12 as of 4 p.m.in NY, reaching a new peak and swelling its post-election rally to more than 5 percent. Before arriving at that decision, the bank’s Governing Council discussed two scenarios – a six-month extension at the current pace, or a nine-month extension with a lower monthly figure, ECB President Mario Draghi told reporters after the policy meeting.

The ECB’s talk of tapering surprised market strategists and investors who had expected the central bank to continue buying EUR80 billion ($86 billion) of bonds a month for most of 2017.

Elsewhere, shares in Swedish biometric technology firm Fingerprint Cards fell 10 per cent, the top decliner in the STOXX Europe 600 index, after the company sharply cut its 2016 revenue forecast.

Across Europe, Italy’s FTSE MIB index rose 1.6pc to its highest since late May, supported by a 4.6pc rise in its banking index to a five-month high.

European bond yields soared Thursday, with German yields touching an 11-month high, after the European Central Bank said it would reduce its monthly bond purchases beginning in April. “The decisions are taken by the council for the euro area as a whole to respect the mandate of price stability and there’s no bias”, he said. It peaked at $1.0875 in the first minute after the statement before turning lower. All three indexes set new records, a day after they each posted gains of at least 1 percent.

CURRENCIES: The dollar rose to 114.22 yen from 113.85 yen. The Nasdaq composite gained 22 points, or 0.4 per cent, to 5,415, on pace for a record close.

Oil rebounded on growing optimism that non-OPEC producers might agree to cut output following a cartel agreement to limit production. Brent crude, the worldwide standard, added 89 cents, or 1.7 percent, to $53.89 a barrel in London. Brent crude edged down 0.1 percent to US$53.83.

Although many investors had expected the European Central Bank to extend the program, they were taken aback by the fact that Draghi slowed down the monthly measures. The Dow Jones Industrial average was 0.1 percent, at 19,568.21.

Warehouse club operator Costco reported a mixed quarter, but Wall Street found some encouraging trends in its business and shares recovered some of their recent losses.

“The presence of the European Central Bank on markets will be there for a long time”, the institution’s president said in Frankfurt after the Governing Council agreed to add more than half a trillion euros to its bond-buying program and extend it until at least the end of 2017.

Yields on Treasuries due in a decade rose five basis points, or 0.05 percentage point, to 2.39 percent after falling nearly six basis points in the prior two days. It wants to keep conditions accommodative just as signs emerge of a revival in inflation, but the eurozone, whilst appearing to have finally shrugged off the pull of deflation, has not advanced as far as the United States has in its recovery.