It's a case of the morning after the night before – or, in this case, after the European Central Bank meeting.
Asian stocks are falling for a third day after the S&P 500 Index slumped the most in two months. Part of the move was down to Fed chair Janet Yellen's congressional testimony, during which she signaled the U.S. economy is ready for higher borrowing costs. Today's U.S. jobs report is likely is confirm that readiness, with employers forecast to add 200,000 positions in November.
Ahead of the European Central Bank announcement yesterday, Goldman Sachs Chief Currency Strategist Robin Brooks made a prediction that a "dovish surprise" from ECB President Mario Draghi would send the euro sinking as much as 3 percent. Well, he got one thing right: the euro did move 3 percent, only in the opposite direction. It was the biggest one-day jump against the dollar since March 2009. Brooks admitted afterwards: "We badly misread this meeting." Goldman Sachs wasn't alone. Yes, the ECB cut the deposit rate to minus 0.3 percent but investors had priced in more. The big disappointment was the failure to expand the pace of bond-buying from 60 billion euros ($65 billion) a month. Two-thirds of economists surveyed by Bloomberg forecast an increase.
To assess the level of disappointment from the ECB's meeting, look no further than the Euro-area bond market. Short-term yields in countries from Germany to Spain to Finland had sunk to record lows ahead of Thursday's announcement. By the close, German 10-year bond yields had risen the most since 2011. Draghi and his colleagues did broaden the range of assets it can purchase to include local and regional government bonds, as well as extending the QE program to at least March 2017. The ECB will also reinvest the principal payments on the assets it purchases. Yet all that failed to meet expectations priced into the region's bond market.
The ECB underwhelmed, and European stocks sunk 3.1 percent on Thursday, the biggest drop in over three months. All 19 industry groups fell. The Stoxx Europe 600 Index had risen 6 percent in the six weeks leading up to yesterday's meeting after Draghi signaled on Oct.22 that more stimulus would be necessary. Mario Draghi - otherwise known as "Super Mario" to some investors - might have lost some of his luster after the reality failed to live up to the hype. Only two weeks ago he said officials would "do what we must to raise inflation as quickly as possible."
The Stoxx Europe 600 Index has risen 8 percent in 2015, outperforming the S&P 500 Index, which is little changed.
Mark Barton is a presenter on Bloomberg TV. Follow him on Twitter @markbartontv