According to Lead Capital Partners, ECB President, Mario Draghi, sent markets on a rollercoaster ride following his highly-anticipated decision on euro zone interest rates yesterday.

Global markets had largely expected the central bank to loosen monetary policy further in response to a subdued economic recovery that has, so far, failed to respond meaningfully to a €60bn per month quantitative easing program and negative interest rates.

Mr. Draghi was keen to avoid disappointing investors again as he had done late last year when he failed to deliver a suitably generous boost to the Bank’s stimulus program. He cut the deposit rate from -0.3% to -0.4% and increased the asset purchase program by another €20bn per month. He also widened the range of assets the Bank buys to include corporate debt.

“The immediate reaction to the news was predictable with European bourses rising sharply and US stock futures registering triple-digit gains,” said David Eckhart, chief market strategist at Lead Capital Partners.

Within the space of an hour, however, markets had slumped into negative territory and the euro had regained ground lost to the US dollar as investors digested remarks made by Mr. Draghi at the post-announcement press conference.

“He appeared to suggest that the ECB did not envisage having to reduce interest rates further at a later date and markets took that badly,” added Eckhart.

While stocks plunged, gold had a good day with prices for the yellow metal jumping sharply to close out the day’s trading at a 13-month high.

Lead Capital Partners reiterated its belief that the Federal Reserve will eventually follow the central banks of Denmark, Japan and the ECB into negative interest rates as the economic picture in the US deteriorates.

About Lead Capital Partners:
Lead Capital Partners is an independent investment management practice founded on the philosophy that an active, opportunistic and adaptable approach to investing provides our clients with the best chance for the realization of long-term positive returns irrespective of prevailing market environments.
It is our firm belief that the “buy and hold” investment strategy that has traditionally served investors to such great effect over the decades can, now, lead to significant losses in bear markets, or to little or no profit in markets that persist in trading in ranges unless they are actively managed by seasoned professionals such as those at Lead Capital Partners.