KBC Market Research Desk
KBC Bank
Despite failed talks regarding Greece, European shares jumped higher today, supported by a ceasefire agreement in Eastern Ukraine. Most shares gain 1%‐1.5%. In the US, equities opened higher too, but optimism was tempered by poor retail sales data.
Talks between the leaders of Germany, France, Russia and Ukraine led to a new ceasefire agreement, which will take effect from Sunday. Merkel and Hollande however cautioned that there is still a long way to go, but added that it offers a glimmer of hope for an end to fighting in eastern Ukraine.
The Swedish Riksbank cut today its main interest rate into negative territory, from zero to minus 0.1% and said it would buy government bonds worth 10 billion krona. The measures should bring inflation more in line with the target. The SEK weakened significantly with EUR/SEK heading for its highest close since July 2007.
In its Quarterly Inflation Report, the Bank of England sounded confident on the strength of the economy and signalled the likelihood that inflation might overshoot its target in 2017. In his press conference, Carney gave no indications on when a first rate hike could be expected.
According to Handelsblatt sources, the ECB decided to extend its emergency liquidity assistance (ELA) to Greece to a total amount of €65 billion.
The IMF agreed today to give Ukraine a new bailout deal worth $17.5billion, an amount that could rise to $40 billion over four years with help from other lenders as Europe and the US. The funds should support economic stabilization and a set of policy reforms aimed at restoring medium‐term growth, the IMF said.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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