European Central Bank to end crisis-era stimulus programme in December

ECB calls halt to quantitative easing, despite 'soft' euro

The European Central Bank just called time on its €2.5 trillion stimulus programme

The ECB said the monthly pace of its net asset purchases would be halved to €15 billion (S$23 billion) from September until the end of December, at which point purchases would end.

Euro zone banks had already weakened on Thursday on disappointment that the ECB would keep interest rates ultra-low for longer, as banks' margins suffer from negative interest rates.

Interest rate on the main refinancing operations, marginal lending facility, and the deposit facility were unchanged today at 0.00 percent, 0.25 percent and -0.40 percent respectively.

The euro slipped a little against the dollar on the news, falling around 0.35% on the day, to €1.175. The global crude benchmark, meanwhile, gave up almost all of the gains it saw a day earlier on the possibility that the Organization of the Petroleum Exporting Countries will decide to boost output when members and other major oil producers meet next week. The currency was down 1.72 percent on the week, positioning it to have its biggest weekly loss since November 2016.

Benefiting from the ECB's decision were stock markets on both sides of the Atlantic.

The greenback was up roughly 1 percent versus its Japanese peer on the week, during which it brushed a three-week peak of 110.850 after the Fed's Wednesday policy announcement.

While the end to QE was expected by markets, he said the bank's decision to commit to not hike rates until later in 2019 was "surprising" given that inflation forecasts indicated that the bank's target was in sight. "It doesn't seem like we're at the stage where the hawks are on top of things".

The U.S. Commerce Department said on Thursday that retail sales increased more than expected in May.

The Dow Jones Industrial Average fell 25.89 points, or 0.10 per cent, to 25,175.31, the S&P 500 gained 6.86 points, or 0.25 per cent, to 2,782.49 and the Nasdaq Composite added 65.34 points, or 0.85 per cent, to 7,761.04. Basic resources stocks led the decline with a 1.3 drop following weak data from big metals consumer China.

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"If we see weakness in bonds as yields rise that's going to affect more the bond proxies".

MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.0 percent.

One issue keeping investors in check was concern about USA threats to impose tariffs on $50 billion of Chinese goods.

Meanwhile, US/China relations are back in the limelight as US President Donald Trump's expected to pull the trigger on implementing $50bn's worth of tariffs on Chinese imports.

CBOT corn and soybean futures tumbled as uncertainty about tariffs and favorable crop weather in the US Midwest prompted funds to liquidate big long positions.

The yield spread between USA 30-year bonds and US 5-year notes narrowed to the flattest level since January 2012 after the Fed decision on Wednesday. Traders are anxious about China, Mexico and other countries curbing demand for USA grain and soy exports.

Meckler said reaction was mixed to the policy announcements, as markets were split between "those that think the economy is very strong and those who are concerned about inflation".

Volume on United States exchanges was 6.75 billion shares, compared with the 6.70 billion average for the full session over the last 20 trading days.

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