Daily Analysis – Draghi Disappoints, European Stocks Tumble

Asian markets settled mixed on Thursday as investors reacted to the Fed’s inaction on Wednesday. The Nikkei inched up .1% to 8653, and the ASX 200 gained .2% to 4270 as miners rallied more than 1%. Korea’s Kospi sank .6%, as Samsung Electronics skidded 2.9%, after the stock climbed 13% in the previous 4 session. Real estate stocks tumbled in greater China, following a report warning of further government restrictions. The Shanghai Composite dropped .6% to 2111, and the Hang Seng shed .7% to 19690.

European markets tanked after the ECB disappointed the market in its afternoon press conference. ECB president, Mario Draghi, had said last week the bank would do whatever is necessary to defend the euro, implying new stimulus was imminent. The CAC40 sank 2.7% to 3232, the DAX tumbled 2.2% to 6609, and the FTSE skidded .9% to 5662. Spain’s IBEX dropped 5.2% and Italy’s MIB fell 4.6%, as the banking sector plunged 6.4%

US stocks dropped as well, but finished well off their lows. The Dow dropped 92 points to 12879, recovering from a 192-point drop earlier in the day. The S&P 500 shed .7% to 1365, and the Nasdaq declined .4% to 2910.

Currencies
The currency markets swung wildly following Draghi’s comments, before returning to their pre-announcement levels. The Euro fell .4% to 1.2182, although it briefly spiked as high as 1.2384. The Pound eased .1% to 1.5516, and the Canadian Dollar slipped .2% to 1.0070. The Yen gained .3% to 78.21, and the Australian Dollar rose fractionally.

Economic Outlook
Weekly unemployment claims rose by 8K to 365K, but beat forecasts of 375K. Factory orders unexpectedly fell by .5%.

Friday’s economic data will include the critical non-farm payroll report. Analysts are expecting the the data to show a gain of 101K jobs last month. Also due are ISM non-manufacturing PMI, the unemployment rate, and average hourly earnings.