On Tuesday, the 18th of June 2019, a basket of European shares surged strongly after ECB’s (European Central Bank) Draghi had signaled further monetary stimulus to lift up Eurozone’s slowing economy at an introductory speech at ECB forum in Sintra, Potugal, while news of United States and China resuming their trade talk had boosted market sentiment.
However, at his Tuesday’s (June 18th) speech, Draghi remained as dovish as usual and hinted that the European Central Bank had been contemplating an option of interest rate cut or asset purchase, unless inflation indicators headed back to the target level, though an interest rate cut would emerge an unconventional approach of a negative interest rate identical to Swiss Central Bank alongside the Central Bank of Japan.
Quoting statistics, following ECB Chair’s speech at Sintra, the regional Pan-European STOXX 600 had snowballed by 1.8 percent after falling as much as 0.5 percent at the morning European trading hours. In fact, the STOXX 600 had posted its best intra-day gain in five months on Tuesday (June 18th), while Italy, France and Germany, all had added more than 2 percent and most of the European stock indices had wrapped up the day as little as 1 percent higher.
Adding that a minor monetary stimulus might have appeared at a near-term outlook depending on the inflation indicators, an European economist at Berenberg in London, Florian Hense said, “Judging by the tone of Draghi’s speech, it would probably take only a small downward deviation in growth and core inflation, and/or an outsized drop in survey-based inflation expectations, for the ECB to take action”.