Euro Drops as Draghi Gives Investors the QE Hints They Wanted

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The euro tumbled to a two-month low after European Central Bank President Mario Draghi gave a crowd-pleasing performance at his policy address in Malta, leaving investors in little doubt he’s ready to deploy more monetary stimulus to boost the flagging economy.

The shared currency fell versus all of its 16 major counterparts after Draghi said officials will reexamine the scope of their quantitative-easing plan in December. The bond purchases, originally due to end next September, will continue until the ECB sees a sustained increase in the inflation outlook, he told reporters. Policy makers also discussed a further cut to the bank’s negative deposit rate, he said.

The euro’s decline vindicated options traders who had added to wagers for the shared currency to reverse its recent rally against the dollar, and who boosted them even more after Draghi’s remarks.

The shared currency dropped as much as 2 percent to $1.1109, the lowest level since Aug. 18, and was at $1.1114 as of 3:05 p.m. New York time. It slipped 1.3 percent to 134.17 yen. Stimulus tends to weaken a currency by expanding the monetary base.

Source: Bloomberg

Crude Oil Gains for 2nd Time in Nine Days as Gasoline Advances

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Oil rose for the second time in nine days after trading below $45 a barrel for a second day. Gasoline gained more than crude, widening refinery profit margins.

West Texas Intermediate futures erased earlier gains as the dollar strengthened before rallying to settle with an 18-cent gain. The gasoline crack spread, a measure of the profit from processing a barrel of oil into the fuel, advanced to above $9 a barrel after sinking to $6.54 in intraday trading Tuesday.

Oil failed to sustain a gain above $50 a barrel earlier this month amid signs the market surplus will persist. U.S. inventories remain more than 100 million barrels above the five-year seasonal average as the country’s refinery utilization rate hovers near the lowest since January. The Organization of Petroleum Exporting Countries continues to pump above its quota while Iran prepares to ramp up output once sanctions end.

WTI for December delivery gained 18 cents to settle at $45.38 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 27 percent below the 100-day average.

Brent for December settlement increased 23 cents to $48.08 at 2:42 p.m. New York time on the London-based ICE Futures Europe exchange. The European benchmark traded at a premium of $2.70 to WTI.

Source: Bloomberg

Asian Stocks Set to Track Draghi Surge While Nasdaq Futures Jump

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The October stock rally is back, thanks to some handy comments on stimulus from Mario Draghi and better-than-expected earnings from Google Inc. and Amazon. com Inc.

Asian index futures signaled gains from Japan to Hong Kong, and Australian equities jumped Friday after Draghi said the European Central Bank will consider bolstering its bond-buying program before the end of 2015, sparking a surge in European and U.S. stocks. Nasdaq 100 Index futures were about 1.6 percent above the gauge’s closing level after shares of Google parent Alphabet Inc. and Amazon jumped more than 10 percent in extended U.S. trading. The euro was at a two-month low, while oil headed for a weekly loss.

The ECB is the latest central bank to switch to a more dovish tone on stimulus, with its willingness to bolster support for the euro-area economy a shot in the arm for risk assets that have benefited from the wave of global monetary easing. With banks and retailers posting more mixed results this season, the results from Google and Amazon, which reported a surprise profit, bolstered optimism over the outlook for U.S. equities. Stocks in New York returned Thursday to their trading range from before China’s shock yuan devaluation in August. A gauge of Japanese manufacturing is due Friday, with Chinese house prices.

The S&P/ASX 200 Index climbed 1.8 percent by 10:13 a.m. in Sydney, rising for a third day to be on track for a 1.7 percent advance in the week. New Zealand’s S&P/NZX 50 Index, the first major stock gauge to start trading each day in the Asian region rose for an 11th day in its longest rally since November.

Futures on the Nasdaq 100 traded at 4,576.75, compared with 4,492.50 at 4 p.m. Thursday in New York and the index’s closing level of 4,503.22. Shares of Alphabet, the new holding company that encompasses Google, soared as much as 13 percent after hours as an increase in advertising sales and restrained spending underpinned the third-quarter results. Amazon reported a 17 cents-a-share profit, amid analysts’ expectations for a loss of 13 cents.

Source: Bloomberg

Bad Memories Fading in S&P 500 After 10% Rally From August Low

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Two months after the first correction since 2011 broke a yearlong calm in U.S. equities, the Standard & Poor’s 500 Index is jumping again, climbing as much as 1.8 percent Thursday to bring its gain from its lowest close in August to 10 percent. The benchmark gauge for American equities now sits at a level last seen on Aug. 19 and is fewer than 7 points below its Dec. 31, 2014 closing price, making its performance year-to-date just about flat.

Slicing it differently: U.S shares have climbed back into the trading range they tumbled out of in August during a six-day selloff that wiped out $2 trillion in market value. Half of the S&P 500’s 10 major groups now are trading above their Aug. 19 closing levels, with energy stocks and consumer staples leading. While few investors are ready to sound the all clear, some see signs the worst is behind them, citing the market’s ability to go up even as corporate earnings fall flat.

The S&P 500 surged 1.7 percent to 2,052.58 at 4 p.m. in New York, sparked by a batch of better-than-estimated earnings from companies including McDonald’s Corp. and EBay Inc., bolstering optimism on the health of corporate America. Prospects that Europe will move to boost its economy provided a further lift as European Central Bank President Mario Draghi said policy makers will investigate fresh stimulus measures.

The rally is also an affirmation of sorts for Wall Street stock forecasters who clung to optimistic outlooks even as the S&P 500 slid more than 11 percent to 1,867.61 between Aug. 17 and Aug. 25. Getting to the median estimate of 21 strategists tracked by Bloomberg of 2,150 would’ve taken a 15 percent rally from August’s lows. Today it requires less than 5 percent.

Source: Bloomberg

U.S. Stocks Rally Amid Corporate Earnings, Stimulus Speculation

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U.S. stocks rallied, heading toward their first gain in three days after a batch of better-than-estimated earnings from companies including McDonald’s Corp. and EBay Inc. boosted optimism on the health of corporate America.

Equities got a further lift from prospects Europe will move to bolster its economy. European Central Bank President Mario Draghi said today policy makers will investigate fresh stimulus measures to thwart downside risks to the growth and inflation outlooks.

McDonald’s jumped the most in seven years and EBay headed for its biggest gain since 2012. Dow Chemical Co. advanced 5 percent after its earnings topped forecasts, and Texas Instruments added 10 percent after better-than-estimated results. American Express Co. lost 5.5 percent after results missed analysts’ forecasts. Valeant Pharmaceuticals International Inc. fell another 14 percent after tumbling 19 percent yesterday.

The Standard & Poor’s 500 Index rose 1.7 percent to 2,052.22 at 12:35 p.m. in New York, rallying above its average price during the past 100 days. The Dow Jones Industrial Average gained 300.34 points, or 1.8 percent, to 17,468.95, while the Nasdaq Composite Index climbed 1.7 percent.

Source: Bloomberg