Stock ETFs Bounce Back After ECB’s Pledge to Do ‘Whatever It Takes’
July 26th at 1:20pm by Tom Lydon
The equities markets and stock exchange traded funds are recovering from the latest Eurozone induced fallout after the European Central Bank promised to defend the euro currency.
ECB President Mario Draghi stated Thursday that they will do “whatever it takes” to preserve the euro, hinting at intervention in the bonds market, specifically in Spain and Italy where surging yields are threatening the private sectors.
“To the extent that the size of these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate,” Draghi said in a speech at the Global Investment Conference, Bloomberg reports. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,”
“It is a big deal,” Liz Ann Sonders, chief investment strategist at Charles Schwab Corp., said in another Bloomberg article. “The markets have been looking for a more definitive acknowledgement by key people like Draghi that they are willing to do what they need to do. In the case of the ECB, we feel that if they want to save the euro, it would involve true quantitative easing,”
The vote of confidence immediately boosted European stocks, with the EURO STOXX 50 Price EURO Index gaining 4.3% Thursday. The Vanguard MSCI Europe Index (NYSEArca: VGK) added 3.5% and the iShares S&P Europe 350 (NYSEArca: IEV) rose 3.56%.
Additionally, the euro currency appreciated 1.0% against the U.S. dollar, with the Guggenheim CurrencyShares Euro Trust (NYSEArca: FXE) up 1.0%.
iShares S&P 500 Index
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Read the disclaimer; Tom Lydon is a board member of the funds for Guggenheim Investments.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.