Global Market Wrap: European Markets Drop On ECB Withdrawal

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Global Market Wrap:

European Markets Drop On ECB Withdrawal

European Trade: European shares moved lower in trade on Friday trade, following  the Asian equity market that closed in the red. S&P futures moved side-ways throughout the overnight trading hours, but dropped eight points as the news that the ECB will withdraw their cash liquidity from the market over the coming months.

“Not all our liquidity measures will be needed to the same extent as in the past,” Mr Trichet, the head of the European Central Bank, said at a conference in Frankfurt today. “Any non-standard measure whose continuation would pose a threat to the achievement of price stability must be undone promptly and unequivocally.”

The quantative easing policy had been questioned recently in regard to the inflationary impact of back-stopping the commercial market activity. Mr Trichet has already intimated that the ECB is unlikely to renew its offer of 12-month loans to banks after the third installment in December.

The European session started with the major indexes moving higher, with the gains equally spread between the European stock markets, and ranging from 0.50% to 0.70%. The DJ STOXX 50 index added 0.55% at the started, all of which was given back after the ECB comments, and then reversed to a 1.5% loss. The DJ STOXX 50 index tracks the evolution of the biggest and influential 50 European companies, also known as blue chips.

Throughout the overnight session, the S&P futures traded in a 3-point range, until they too dropped in-line with the overall market, and indicated a negative start to Wall Street trade. The market’s volatility is expected to be below the average of the last few weeks of trading, due to the light trading calendar and due to Friday’s Option expiry for November strikes.

Sector Moves: The computer manufacturer Dell tumbled 6% in Friday trade. The sell-off came after the company missed their Q3 earnings forecasts. This might cause weakness in the technology sector during the upcoming U.S. session, which has been a major drag on the market over the last two day of trading.

Economic Moves: The European session was clear of any important news reports.

Crude oil was recently trading at $77.00 per barrel, lower by $0.25.

Gold was recently trading lower by $0.40 to $1137.00