CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Stocks jump for third day after Central Banks free up dollars to fill liquidity holes

Article By: ,  Financial Analyst
September 15, 2011 11:29 AM

European stock Indices climbed strongly for a third straight session on Thursday, boosted by coordinated action by Central Banks to keep banks liquid at a time when a severe drop in confidence meant that European banks had started to limit lending to each other.

Central Bank action lifts optimism
Today’s move by the ECB, BoE, Federal Reserve, BOJ and SNB to extend three-month dollar loans at fixed rates until the end of the year is clearly a move to shore up bank liquidity at a time when Europe is struggling to contain the sovereign debt fall out.

The market reaction to the decision was quick and bullish, seeing European indices gain another 1% in a matter of minutes and helping the FTSE 100 to close higher on the day by over 2%.

Much of the gains were led by Europe’s banks, with investors seeing the move as a positive one in helping struggling banks to shore up any liquidity holes until the end of the year, by which time it is hoped that Europe’s leaders would have got their act together and enforced strong action to combat the sovereign debt crisis.

French banks, which have been hit hard recently by mounting concerns over liquidity immediately saw a bounce, with shares of Societe Generale, BNP Paribas and Credit Agricole rallying between 5% and 11% on the day.

The euro also saw strong gains, with investors buying into the single currency which rose 0.9% against the US dollar and 0.6% against the pound sterling.

One cannot help think that the coordinated Central Bank action shown today to plug any liquidity crisis flies in the face of much of the rhetoric we have seen lately that there is no liquidity crisis at Europe’s banks. Today’s action appears to contradict that but nevertheless, the action has thus far been seen as a positive by investors.

Much of the lift we have seen in European markets will now be dictated by market confidence that European leaders can rally behind Greece and prevent the indebted nation from a default.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024