Markets turn sour as Draghi signals end to rate cuts

The euro see-sawed on Thursday as major new stimulus measures by the European Central Bank were offset by a signal from ECB chief Mario Draghi that it will only cut interest rates again in the most extreme of circumstances.

Markets had initially roared their approval as the ECB cut its rates to fresh record lows and said it would start buying corporate debt for the first time and effectively begin paying banks to borrow from it to lend to companies and households.

Shares jumped 2.5 per cent, euro zone bonds rallied and the euro initially dropped over a cent to $1.0820, but the mood turned as Draghi signalled years of interest rate cuts may finally be at an end.

Dublin

The Iseq index ended a volatile day’s trading, down 1. 5 per cent at 6,189.

Bank of Ireland had perhaps the most topsy-turvy day, initially falling 4 per cent in the morning before surging up 3 per cent only to finish flat at 27 cents.

Permanent TSB closed down 1.3 per cent at €2.76, having been down by over 3 per cent at one stage.

Ryanair remained weak despite another fall in oil prices, closing 0.45 per cent down €13.40.

Drinks group C&C saw its shares rise 4.4 per cent to €3.70 after releasing a positive trading update.

Insulation maker Kingspan closed down 2 per cent at €21.77, which was roughly in line with other stocks plugged into the global economy.

Similarly building materials group CRH finished down nearly 4 per cent at €23.82.

After posting good results earlier in the week, Paddy Power Betfair fell 1.7 per cent to €122.10.

London

The London market nosedived into the red, as the European Central Bank (ECB) poured cold water on the prospect of future rate cuts. The FTSE 100 fell 109.6 points to 6036.7 after Mr Draghi ruled out any further moves to slash rates.

In stocks, supermarket Morrisons saw its shares come under pressure after posting further falls in profits. The FTSE 250 supermarket chain saw annual underlying pre-tax profits tumble 29 per cent to £242 million, despite a brighter performance for like-for-like sales, which declined 2 per cent compared with a fall of 5.9 per cent in 2014. Morrisons shares were down 9.1p to 192.9p as the firm announced a statutory pre-tax profit of £217 million.

Home Retail Group also saw its stock value fall 0.2p to 180.2p as the pace of sales declines at Argos halved as its overhaul remains on track.

The biggest risers in the FTSE 100 Index were Intu Properties up 4.3p to 299.8p, Aviva up 6.2p to 465.8p, Randgold Resources up 70p to 6360p, Shire up 40p to 3785p.

Europe

The Stoxx Europe 600 Index lost 1.7 per cent at the close of trading, the biggest drop in two weeks. The benchmark earlier jumped as much as 2.5 per cent after the ECB lowered its three main interest rates, increased bond purchases by a third and made corporate debt eligible.

Shares then headed lower after Mr Draghi’s comments stoked concern that the central bank has limited monetary-policy tools in the future.

All industry groups declined except real-estate shares. Carmakers tumbled the most as the euro strengthened against the dollar, with Continental and Daimler down more than 4 per cent.

Among shares active on corporate news, Lagardere tumbled 13 per cent after its full-year net income halved. K+S declined 10 per cent after its quarterly revenue missed projections.

New York

Wall Street reversed course and slipped sharply into the red in volatile trading on Thursday . By early evening, the Dow Jones industrial average was down 107.41 points, or 0.63 per cent, at 16,892.95, the S&P 500 was down 10.84 points, or 0.54 per cent, at 1,978.42 and the Nasdaq Composite was down 31.36 points, or 0.67 per cent, at 4,643.02.

All 10 major S&P sectors turned negative, led by the energy sector, which fell 1.13 per cent. Exxon was off 1.3 percent at $81.35.

The S&P financial sector was down 1 percent, led by a 2 percent fall in JPMorgan shares.

Shares of Dollar General were up 8.2 percent at $81.41 after it reported better-than-expected same-store sales growth. Rival Dollar Tree was up 2.9 percent.