US open: Stocks rise as ECB extends QE

US stocks ticked higher on Thursday following the prior day's record gains, while the European Central Bank announced it will extend its quantitative easing programme but taper its purchases after March 2017.

The Dow Jones Industrial Average rose 0.08% to 19,565.87 points, the S&P 500 was up 0.04% to 2,242.18 points and the Nasdaq gained 0.23% to 5,405.91 points, at 1542 GMT.

In commodity markets, oil prices advanced ahead of a Saturday meeting in Vienna between OPEC and non-OPEC members which may result in a further cut in production.

Brent crude was up 0.74% to $53.40 per barrel, while West Texas Intermediate rose 0.91% to $50.23 at 1431 GMT.

But gold on Comex was weaker by 0.33% to 1,173.60 per troy ounce at 1326 GMT.

In Europe, the continent’s main indices were firmly in the green while the euro fell against the dollar as the ECB extended its bond-buying programme until December 2017, but will start to taper the scheme by scaling back quantitative easing from April to €60bn per month, down from €80bn.

It also left interest rates unchanged at 0.00%, while rates in the marginal lending facility and deposit facility were also maintained at 0.25% and -0.4% respectively.

Ranko Berich, head of market analysis at Monex Europe, said tapering appears to be the ECB simply turning monetary policy off its emergency setting to reflect the diminished risk of deflation.

“The bottom line remains that core inflation in the eurozone is not improving yet, as Mario Draghi himself clearly acknowledged. The ECB’s staff projections underlined just how weak the outlook for inflation currently is. As such, monetary policy must remain exceptionally loose.

“The curve steepening seen across European sovereign yields shows the ECB did its job today, reassuring markets that although rates will be low in the medium term, this will restore growth and inflation in the long-term. The question, of course, is what happens if global inflation dynamics change in 2017, due to higher oil prices and a potentially big spending Trump administration?

“The Federal Reserve is likely to lead the monetary response to such a development due to the tight labour market in the US, but if the ECB has to deal with an improvement in the inflation outlook its response could prove far more significant globally.”

In currency markets, the dollar jumped 1.06% to 0.9399 versus the euro, rose 0.4% to 114.22 against the yen and was up 0.18% to 0.7934 versus sterling.

Meanwhile, the Labor Department revealed that the number of Americans filing for first-time unemployment benefits fell last week after a five month high, suggesting that the economy is expanding.

US joblessness decreased by 10,000 to a seasonally adjusted 258,000 for the week ended 3 December.

In corporate news, Hovnanian Enterprises dropped 3.28% as the housebuilder reported a fall in fourth quarter earnings.

Profit tanked 12.6% to £22.29m, or 0.14 cents per share, compared to the same period last year.

Whereas Lululemon Athletica surged 17.46% after the Canadian retailer reported better-than-expected earnings late on Wednesday.