Hong Kong: And we have liftoff! Markets across Asia are on a tear this morning, after an extraordinarily forceful intervention by the ECB president in defence of the euro that has calmed investors’ nerves, which had been jangling on fears of an imminent implosion in the eurozone.
As at 7.30 am IST, Nifty futures are up nearly 1.2 percent, back within striking distance of the 5150 mark. Elsewhere across the region too, indices are all sharply up, in excess of 1.2 percent or more.
Overnight, Wall Street had its best day in weeks, with the Dow Jones index finishing up nearly 1.7 percent after the ECB president’s comments.
Listen to market audio:
His precise words were: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro… And believe me, it will be enough.”
And that was enough for investor sentiment to turn around, essentially because his comment provided a backstop for risk assets. Markets are reading this as a signal that the ECB will opt for renewed bond buying at its policy meeting next week.
But Barclays analyst reckon that even if the ECB does not actually intervene, just keeping alive the prospects of intervention provides a backstop. What was earlier seen as a one-way bet against the euro now becomes a two-way trade.
The euro bounced back overnight, and so did the Indian rupee, as companies with long dollar positions were forced to sell.
Back home, the weak monsoon is a bit of a dampener on sentiment, and the fact that there has been no forward movement on policy action even a month after Manmohan Singh took over the Finance portfolio has some analysts fretting.
For today, however, the strong gust of positive global cues is enough to give the Indian market a big bounce at the start.