Europe ETFs retreated Thursday, following the European Central Bank’s announcement of new cheap loans for banks and forward guidance for low interest rates ahead, as traders interpreted the stimulus measures as a sign of weakness for the economic environment ahead.
On Thursday, the Vanguard FTSE Europe ETF (NYSEArca: VGK) declined 1.1% and iShares MSCI EMU ETF (NYSEArca: EZU) was 1.3% lower. VGK also broke back down below its long-term support at the 200-day simple moving average.
In a major policy reversal Thursday, the ECB revealed plans for fresh measures to stimulate the Eurozone economy less than three months after ending a €2.6 trillion, or $2.9 trillion, bond-buying program, the Wall Street Journal reports.
The ECB will hold rates at their current levels at least through the end of this year and announced plans for a new round of cheap long-term loans for banks. ECB President Mario Draghi attributed the stimulus measures to prevalent risks in the economy.
“The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment,” Draghi said.