European government borrowing rates plummeted to record lows, the euro weakened to an 11-year low against the dollar and stock markets rallied after the ECB launched its landmark bond-buying programme.
The stubbornly stagnant euro zone economy and falling consumer prices in the currency bloc prompted the ECB to unveil a €60 billion a month asset-purchase programme to run from March 2015 until the end of September next year.
"In a nutshell, the ECB seems to have taken the bull by the horn," said Benoit Anne, head of global EM strategy at Societé Generale.
In response, the euro fell 1.6 per cent to $1.1423 and touched $1.1404, the weakest level since November 2003. The last time the currencies traded one for one was in 2002.
It also fell by more than 1 per cent against the yen and the Swiss franc.
‘Took out the bazooka’
“He took out the bazooka . . . It is a big and credible programme,” said
David Keeble
, global head of interest rates at Credit Agricole in New York.
Only Denmark’s krone fell more as its central bank cut rates a second time this week.
Yields on bonds which will be bought under the programme fell. Spanish and Italian 10-year bond yields fell by more than 10 basis points to new record lows of 1.446 per cent and 1.611 per cent, respectively.
Yields of Irish 10-year bonds fell to a fresh low of 1.15 per cent before rising slightly.
German 10-year Bund yields, which set the standard for euro zone borrowing costs, hit a new low of 0.377 per cent, down from 0.53 per cent before Mr Draghi spoke.
"Investors are going to be forced to higher-yielding assets," said Wilmer Stith, fixed income portfolio manager at Wilmington Trust in Baltimore, Maryland. "That's what the ECB wants to happen. They want to enlist more risk-taking in the economy."
The FTSEurofirst 300 index of top European shares hit a seven-year high, while Germany’s DAX hit a record high, before paring gains. Italy’s MIB index and Spain’s IBEX were up 1.5-1.7 per cent.
The Iseq index of shares in Dublin finished the day up 1.4 per cent at 5,466 in line with trends elsewhere.
Mr Draghi said the quantitative easing programme would include purchases of bonds with maturities of up to 30 years.
