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Markets are calmer after Draghi's announcement yesterday, oil extends gains in anticipation of this weekend's OPEC meeting, and South Korea's president is impeached. Here are some of the things people in markets are talking about today.
Dust settles on the ECB
Just don't call it a taper. Yesterday, European Central Bank President Mario Draghi revealed that he'll extend monetary stimulus for an extra nine months, at a reduced pace of 60 billion euros per month — a package of asset-purchases that will essentially be lower, for longer. While these mixed messages sparked a volatile trading day, equity investors seem to have interpreted the decision as a buy signal, and the euro was today little changed. Next week, attention shifts to the U.S. Federal Reserve, with anything less than a rate hike constituting a major upset.
Another day, another world leader toppled. This time, it's South Korean President Park Geun-hye, who's been impeached with an overwhelming majority of votes in parliament. That means she's been suspended from power until the constitutional court rules on the lawmakers' decision. It must do so within six months, which would then start the clock for an election within 60 days. The won snapped three days of gains on the news, to trade 0.6 percent lower by 4:20 a.m. New York time. Meanwhile in Italy, Matteo Renzi, who formally resigned as prime minister earlier this week, is back in the running for the position.
The Organization of Petroleum Exporting Countries’ surprise Nov. 30 production deal aimed at stabilizing oil prices will return to focus this weekend, as members convene with other major producers in Vienna. Ahead of the meeting, a barrel of West Texas Intermediate for January delivery extended gains above $51 dollars by 4:17 a.m. ET. A hedge-fund manager who correctly called the first-quarter oil slump expects the combined output cut agreed to by OPEC and Russia to boost oil to $70 a barrel in the first half of next year, while others are saying a deal won't do enough to drain stockpiles.
Chinese price surges
While ECB projections released yesterday show inflation in the euro area will fall short of its targets, new data suggest that China may be poised to export inflationary pressures. In November, the country's factory-gate prices rose 3.3 percent versus the same month of last year, the fastest pace of gains since late 2011. Chinese consumer prices picked up on rising food costs, but it was the first time in five years that producer prices increased at a faster rate.
European markets are taking stock after yesterday's ECB-driven volatility that saw the euro tumble the most since June. The Stoxx 600 Index was up 0.12 percent at 5:21 a.m. ET, on course for its biggest weekly rally since February, as global bourses ride record highs this week. European banks are on course for their best weekly gain in five years, while Turkey's lira pipped the won to lead declines in emerging-market currencies. The MSCI Asia Pacific Index gained 0.15 percent, as of 05:19 a.m. ET, while the yen was the biggest loser among G-10 currencies.
What we've been reading
This is what's caught our eye over the last 24 hours.
- The most significant market event this year wasn't Brexit or Trump.
- A strong dollar may buoy Chinese exports.
- What you need to know about gold in 2017.
- S&P just demolished a big distinction between emerging and developed markets.
- All may not be lost for Trump's once-doomed Black Sea tower.
- The ECB is damned.
- The next crisis?