European stock indices pushed higher this morning amidst a new ceasefire agreement between the European Union, Ukraine and Russia.
Thursday, February 12, 2015
Additionally, a round of economic stimulus from Sweden’s central bank reinvigorated the market. Both headlines were a welcome sight for investors, who had been waiting for good news during the Ukrainian crisis and uncertainty in Greece.
The ceasefire is set to begin on February 15, not long after the International Monetary Fund established a 4-year Ukrainian funding initiative worth $40 billion.
"It's no surprise to see European stocks trade higher on the back of the ceasefire agreement between EU leaders, Ukraine and Russia. This is giving stocks a fillip to push higher," Josh Raymond, senior strategist at City Index in London, told Reuters. "It's estimated that in 2014, Russian trade sanctions cost the German economy as much as 8 billion euros, with trade to Russia down by around 20%. That's why we've seen such a positive reaction in German stocks to the news."
European indices climbed on Thursday. The Stoxx Europe 600 gained 0.9%, Germany’s DAX added 1.8%, France’s CAC 40 rose 1.17%, and the UK’s FTSE 100 advanced 0.17%.
Sweden initiates quantitative easing program
The Swedish central bank – the Riksbank – became the latest European bank to announce a bond-buying program known as quantitative easing, reported The Wall Street Journal. Additionally, the Riksbank reduced its main interest rate to below zero for the first time ever – which is notable, as the Riksbank is the oldest central bank in the world.
Sweden’s central bank is one of a growing number of banks to enact alternative strategies for combating low inflation.
“These measures and the readiness to do more at short notice underline that the Riksbank is safeguarding the role of the inflation target as a nominal anchor for price setting and wage formation,” the central bank said in a statement, noting a target of 2% inflation.
The Riksbank’s decision and the recent ceasefire in Ukraine act as positive influences in the market. Investors should not get too jumpy, thought, because the Greece concern is still present and there is no telling whether or not QE or the ceasefire will be successful.
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