Equities fell off a cliff in the afternoon session as the European Central Bank (ECB) delivered fewer goodies than the market had been expecting.
“This is not an insignificant stimulative package from the ECB – but it is right at the lower end of market expectations,” said Howard Archer, chief UK & European economist at IHS Global Insight.
“The main disappointment in the markets has been a smaller than expected deposit rate cut and a failure to increase the monthly amount of asset purchases under the Quantitative Easing programme (from 60 billion euro). As a result, the euro has surged, Eurozone equity markets have sagged and bond yields have risen,” Archer continued.
The ECB moved its deposit interest rate further into negative territory, adjusting it to -0.3% from -0.2% in an attempt to encourage banks to lend to business rather than leave it on deposit with the central bank.
According to Jasper Lawler at spread betting firm CMC Markets, “every metric of the ECB’s easing was less than expected by markets”.
“The ECB cut the deposit rate by the minimum amount expected, extended the length of QE programme by six months when the market was looking for 12 months and expanded the pool of assets available for purchase without increasing the size of monthly purchases,” Lawler noted.
The result was the FTSE 100 plunged from positive territory to close 2.3% lower, down 146 points, at 6,293.
London’s blue-chip stocks were relatively flat today, as investors await news from European Central Bank President Mario Draghi.
Among the blue-chips house builder Berkeley Group (LON:BKG) was a rare bright spot, climbing 1.5% to 3,362p ahead of results tomorrow.
SABMiller (LON:SAB) edged up 1.5p to 4,047p as reports emerged that Anheuser-Busch InBev is prepared to sell off a number of SAB's premium brands in order to ensure its takeover of the brewer is cleared by the competition authorities.
In the small cap space, Starcom (LON:STAR) charged 28% higher as it signed a deal worth US$5.5mln over three years – its biggest contract to date.
It will supply its Helios vehicle tracking devices to a Nairobi, Kenya-based firm called Pinnacle Systems.
In the energy sector, Pantheon Resources and 88 Energy slugged it out to be the best performer in the sector.
88 Energy (LON:88E) rose 10.5% after it confirmed an active petroleum system across its Project Icewine acreage in Alaska in its shallower secondary target., but that rise was trumped by Pantheon (LON:PANR), up 11.6%, as its latest well, VOS#1, in Tyler County, East Texas, has uncovered three potential oil and/or gas bearing zones.
Cloud-based video editing platform developer Forbidden Technologies (LON:FBT) enjoyed a second successive day in the sun, with investors sensing which way the wind is blowing after it got something tangible out the UN Climate Change conference in Paris, with the sale of a licence for its Forscene product.
Into each life a little rain must fall and today it was raining bucket loads on Greek mobile marketing outfit InternetQ (LON:INTQ).
The shares more than halved after an attack dog journalist laid into the company in a blog post, prompting the company to issue a statement refuting the allegations.