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Super Mario does it again

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The biggest story of today’s session, and arguably of the whole week, comes from Frankfurt and ECB President Mario Draghi’s hinting at further stimulus measures at the central banks next meeting in March. This has led to a sharp decline in the Euro currency and provided a much-needed boost to the continent’s stock markets. The Italian was more Dovish than expected during his press conference following the announcement of an unchanged interest rate, as summed up by the line “There are no limits to how far we will use our tools to achieve our mandate”.

Also this afternoon we had the weekly EIA inventory data released stating that US stock piles of Crude have risen by 4 million barrels. Increases in storage suggest excess supply and are traditionally seen as bearish for the market. However we observed a sharp rally following the release and the failure to go lower, when supported by economic data could prove an important signal. Have we seen a bottom in Oil, or is this just a dead-cat bounce?

European markets are ending their day higher with the Eurostoxx 50 (+1.42%) leading the gainers. The FTSE (+0.96%) and Dax (+1.29%) are also firmly higher as it appears that Super Mario has raised the dour market sentiment somewhat. The US stock markets are also trading in positive territory with the US 30 (+0.79%) up over 100 ticks at the time of writing.

As we pointed out earlier there’s been a strong bounce in Crude this afternoon with both Brent (+2.87%) and WTI (+3.04%) enjoying a rally. Brent, the global benchmark, is up over $1 since the release of the EIA data at 16:00. Gold (-0.52%) is dropping on the improving sentiment, down just over $5 to $1094.26/oz.

In currencies today the biggest mover is USDCAD (-1.58%) as the pair drops on a strengthening Loonie, aided by both the Bank of Canada’a inaction yesterday and the rising oil price. EURUSD (-0.61%) and EURGBP (-0.58%) have both dropped following Draghi’s allusions to further easing. The increasing risk-on appetite has seen commodity currency crosses such as AUDUSD (+0.65%) and NZDUSD (+0.59%) rise higher.

Looking forward to tomorrow, we have a follow-up from Mario Draghi as he speaks from Davos at 07:45. However it’s unlikely he’ll veer far from the tone used today so it may prove to be a bit of a non-event. Flash manufacturing PMI’s around Europe will be of interest, with the German release at 08:30 arguably the stand-out. UK retail sales at 09:30 could prove market-moving for the Pound and FTSE, as we’ve see both move off their recent lows today.

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