Draghi's Policy Update Sends European Stocks to Two-Month Highby
France's CAC 40 and Germany's DAX rally most, more than 2.2%
Volatility index falls to lowest level since Aug. 10
Mario Draghi gave stock investors what they wanted.
European shares spiked after the European Central Bank president said the ECB will re-examine the degree of stimulus in December, adding that the quantitative-easing program will continue until beyond September 2016 if needed. The central bank also discussed lowering deposit rates, Draghi said. The Stoxx Europe 600 Index climbed 2 percent, the most since Oct. 5, to 369.99 at the close of trading in London.
“It was what the market wanted to hear,” said Guillermo Hernandez Sampere, who helps manage about 150 million euros ($167 million) as head of trading at MPPM EK in Eppstein, Germany. “It will take a few days until the whole market has evaluated what he says between the lines, but my first reaction is positive. It will be a trigger to inflate another rise in equity markets.”
Investors were counting on central-bank action after concern over slowing global growth took the Stoxx 600 just 2 percentage points away from a bear market last month. Since then, it’s rebounded 9.1 percent. The VStoxx Index, a gauge of stock-market stress, fell 8.5 percent today, the most in almost a month.
Among stocks moving on corporate news, Orange SA rallied 7.5 percent after raising its annual profit forecast. Logitech International SA surged 9.6 percent after the Swiss maker of computer mice reported profit and revenue that beat projections. Pernod Ricard SA climbed 5.2 percent after the second-biggest distiller forecast earnings will increase this year. Novozymes A/S jumped 11 percent as the Danish biotechnology company posted earnings that beat projections.
Publicis Groupe SA tumbled 7 percent after saying it recorded no growth in September. Kesko Oyj slumped 13 percent as it lowered its annual profit forecast. DNB declined 4.3 percent after Norway’s biggest lender said net interest income rose less than analysts had estimated.
Credit Suisse Group AG slid 1.5 percent after Switzerland instructed the nation’s biggest banks to hold capital equal to 5 percent of assets, while UBS Group AG climbed. Deutsche Bank AG advanced 2.5 percent after people familiar with the matter said the company may cut the bonus pool for its investment bank by almost a third.
Other stocks moved on deals activity. Deutsche Wohnen AG rose 5.2 percent after abandoning its 4.6 billion-euro ($5.2 billion) offer to buy LEG Immobilien AG to focus on defending itself against a bid from Vonovia SE. LEG added 5.1 percent and Vonovia 6.4 percent.