Markets Tumble on Draghi’s Refusal to Print
Source: http://feeds.benzinga.com/~r/benzinga/trading-ideas/~3/f00MhdGTVHs/markets-tumble-on-draghis-refusal-to-printPosted on Thursday, December 8th, 2011 | In Current Market News, Trading Ideas
On Thursday, the European Central Bank opted to drop its benchmark interest rate by 25 basis points to 1.00%.
The ECB's president, Mario Draghi, cited worsening economic conditions in the Eurozone as the primary motivator behind the rate cut. This comes in contrast to Draghi's predecessor—Jean-Claude Trichet—who hiked rates twice earlier in the year on concerns over inflation in the Eurozone.
In the following press conference, Draghi initially made comments that propelled the market strongly higher.
He unveiled a program that would have the ECB making 36-month loans to European banks, and predicted that while inflation may stay above 2%, it would moderate in coming months.
Traders may have interpreted his comments as being inflationary. Gold spiked higher in the premarket as US equity futures rallied.
Yet, anyone taking that stance might have been burned within minutes.
Roughly halfway through Draghi's press conference, the central banker changed tone.
Draghi stated that he did not foresee further bond purchases. He went on to say that comments he had made ...
About Paul Quintaro (http://www.benzinga.com/etfs/feed.xml/etfs)
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