Financial markets were unimpressed by European Central Bank president Mario Draghi’s suggestion that the bank is preparing a new approach to get a grip on the continent’s debt crisis.
US stocks are sliding after the European Central Bank failed to take any decisive action for solving the region’s debt crisis.
Hopes had been high that the ECB would roll out concrete steps after president Mario Draghi promised last week to do “whatever it takes” to keep the union of the 17 countries that use the euro intact.
US stocks are sliding after the European Central Bank failed to take any decisive action for solving the region’s debt crisis. AFP
Draghi told a press briefing after the ECB held its main interest rate at 0.75 percent that the bank can intervene in the bond market to drive down high interest rates.
He said the ECB could buy bonds in the markets, insisted that the euro currency was irreversible and promised to address investor concerns that the ECB will be repaid first on any bonds it holds, before other investors.
He also said the ECB would consider other emergency measures over the weeks to come. Though many analysts think that could mean the ECB could inject new money in the financial system, it’s not a done deal — Germany’s Bundesbank is likely to remain opposed.
“After all, these remain promises,” said Dan Greenhaus, chief global strategist at BTIG. “Investors are tired of promises. They want action.”
Before Draghi’s statement, stocks and the euro were buoyant. As he spoke they both went into reverse.
In Europe, Germany’s DAX was down 1.4 percent at 6,657 while the CAC-40 in France fell 1.3 percent to 3,278. The FTSE 100 index of leading British shares was down 0.7 percent at 5,675.
The euro was 0.2 percent lower at $1.2215.
The Dow Jones industrial average is down 86 at 12,885. The S&P 500 is down 11 to 1,365. The Nasdaq composite index is down 17 to 2,903.
Knight Capital, the company that Wednesday took the blame for a technical glitch that sent trading briefly into chaos, plunged 49 percent, losing $3.40 to $3.54.
Abercrombie & Fitch and Aeropostale are also down sharply after pre-announcing disappointing second-quarter sales.
AP
