Markets opened up initially on Thursday morning trading, after the European Central Bank (ECB) announced a €750bn (£702bn, $808bn) stimulus package to counter the economic impact of the Covid-19 crisis.
The substantial intervention has not managed to reverse the tide however, with indices across the eurozone falling by mid-morning trading.
By mid-morning trading, the leading indices of the eurozone’s largest economy, the German DAX, has fallen by 1.33 per cent.
Some indices, such as the Cac 40 and IBEX 35 are still up, by 0.42 and 0.90 per cent respectively. However, these gains are far smaller than the significant, if short-lived, rally in US stocks which followed the Federal Reserve’s intervention last week.
Whereas the Fed’s intervention came before a complete lockdown, unlike the ECB’s, could partially explain this disparity. The pan-European Euro Stoxx 50 and Euro Stoxx 600 indices have fallen by 0.20 and 0.17 per cent respectively.
If major sell-offs in European stocks continue then the ECB is expected to begin purchasing equities and cut interest rates, having resisted in recent weeks.
The central bank’s president, Christine Lagarde, stated: “Extraordinary times require extraordinary action. There are no limits to our commitment to the euro. We are determined to use the full potential of our tools, within our mandate.”
The words of central bankers appear to hold less and less weight as the coronavirus crisis wears on. After the pound (GBP) sank to its lowest level on the dollar (USD) on Wednesday, the FTSE 100 and FTSE 250 indices have slumped by 0.71 and 1.72 per cent respectively in Thursday trading.
All of this is despite the Bank of England’s new governor, Andrew Bailey, asserting that he is ready to print unlimited quantities of money to buoy the economy.