European markets rallied on Wednesday on the prospect of increased easing measures from the European Central Bank (ECB) after a number of reports hinted that the central bank is considering such a move. The rally followed stark declines on Tuesday after the downing of a Russian jet in Syria by Turkey. The pan-European Stoxx Europe 600 added 1.38% to trade at 380.84 as all of the index’s sectors finish higher. Among the sectors, the consumer services led the gainers. The German DAX 30 added 235.55 points, or 2.15%, to trade at 1,169.54. The UK’s FTSE 100 rose 60.41 points, or nearly 1%, to close the day at 6,337.64 and the French CAC 40 gained 72.71 points, or 1.51%, to trade at 4,892.99. The euro lost some ground against the dollar, falling 0.28% to trade near $1.06, marking its lowest point since April. The common currency declined after a newly released Reuters report indicated that ECB officials were considering further expansion of its 1.1 trillion euro asset-buying program launched earlier this year. According to the report, the central bank is considering increased bond buying as well as a two tier negative deposit rate for banks not adhering to the ECB’s preferred deposit policies. The move, however, is likely to be rejected by key Eurozone members, including France and Germany. The ECB began its expansion program in an effort to increase inflation in the Eurozone, however the central bank’s current strategy has yet to match their declared inflationary goals.
Despite the European rally, U.S. shares were mostly flat in a low-volume trading session ahead of the Thanksgiving Day holiday on Thursday. Economic data released on Wednesday has shown conflicting results in key areas. U.S. durable goods orders have risen by 3% in October for the first gain in three months, led by higher than expected demand for commercial airplanes. Consumer spending, however, failed to reach expectations for the second consecutive month with a modest 0.1% climb. The Dow Jones Industrial Average added 1.27 points, or 0.01%, to trade at 17,813.46. The Standard and Poor’s 500 shed 0.26 points, or 0.01%, to trade at 2,088.88 and the Nasdaq Composite rose 13.33 points, or 0.26%, to close Wednesday’s trading session at 5,116.14.
This week’s major economic data releases continue today with the release of Chinese industrial orders and production. U.S. trade will be closed for Thanksgiving Day. A large number of Japanese data releases are scheduled for Friday, including a number of reports regarding inflation and employment. UK GDP will be released later during the day.