DAX soars in ECB's shadow
January 19, 2015
Amid fresh hope for more cheap money from the European Central Bank, investors helped Germany's blue-chip DAX to a new high within the first few minutes of trading Monday.
The stock index jumped to well over 10,200 points, marking a 0.7-percent rise from its previous peak last Friday.
German utility company RWE emerged as one of the biggest gainers in early trading, following its announcement last week it would push through the sale of its oil and gas subsidiary Dea to an investment group headed by a Russian oligarch. The deal is reported to be worth some 5 billion euros ($5.7 billion).
Risk-sharing approach
The real driver behind the renewed surge on the Frankfurt Stock Exchange was increasing confidence among financial players. The ECB is expected to announce the launch of its long-awaited bond-buying program during its policy meeting this coming Thursday.
Insiders suggested the central bank might go for a hybrid approach: buying some sovereign debt itself while letting national central lenders also make separate purchases. This, in turn, would share some of the risks of the quantitative easing (QE) measure.
There's been talk the program would be limited to 500 billion euros.
"The market is baying for action from the ECB on Thursday, with expectations now firmly entrenched in favor of a QE announcement," RBC Capital Markets economist James Ashley told Reuters.
hg/el (Reuters, AFP)