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European shares back to earth after Draghi bombshell

Published 06/19/2019, 03:31 PM
Updated 06/19/2019, 03:40 PM
European shares back to earth after Draghi bombshell
STOXX
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SX7P
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VMUK
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(For a live blog on European stocks, type LIVE/ in an Eikon
news window)
June 19 (Reuters) - European stock markets were flat on
Wednesday after posting their best results in five months a day
earlier thanks to a strong policy speech from European Central
Bank chief Mario Draghi that flagged a potential return to
bond-buying and lower interest rates.
Draghi's speech sank the euro and drove major euro zone bond
yields back below zero, slashing effective market borrowing
costs, giving a boost to companies worried by sagging growth and
driving the pan-European STOXX 600 index .STOXX almost 2%
higher.
It was flat compared to Tuesday's close by 0709 GMT,
although interest rate sensitive banking stocks .SX7P
outperformed with a 0.7% rise.
Clydesdale and Yorkshire Banking Group CYBGC.L bucked that
trend to gain 2.8% after the British lender pledged to make an
additional 50 million pounds ($62.75 million) in savings from
its takeover of rival Virgin Money. Also keeping markets afloat was news that China and the
United States are rekindling trade talks ahead of a meeting next
week between Presidents Donald Trump and Xi Jinping at the G-20
summit in Japan, sparking hopes that the tensions between the
two sides would abate. Draghi's speech has also further upped the stakes for a
Federal Reserve policy meeting that will be Wednesday's main
market event, already expected to point the way to interest rate
cuts for the second half of this year.


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