The S&P 500 hit an intraday record high for the seventh time in eight sessions today after the European Central Bank cut rates to record lows and outlined further accommodative monetary policy actions.
After mostly pricing in the ECB’s move, the market is expected to focus on tomorrow’s US payrolls report for May as it looks for confirmation of a pick-up in hiring and economic activity in the second quarter.
The Dow Jones industrial average rose 24.17 points or 0.14 percent, to 16,761.7, the S&P 500 gained 1.93 points or 0.1 percent, to 1,929.81 and the Nasdaq Composite added 9.98 points or 0.23 percent, to 4,261.62.
Main euro zone equity indexes treaded water ahead of a European Central Bank meeting which is expected to yield fresh measures to spur growth.
At its meeting today, the ECB is expected to impose negative interest rates on its overnight depositors, seeking to prompt banks to lend instead and to prevent the region from slipping into Japan-like deflation, and launch a long-term refinancing operation (LTRO) targeted at businesses.
The euro zone’s Euro STOXX index was up by 0.3 percent at 329.87 points while the blue-chip Euro STOXX 50 was up by 0.2 percent at 3,245.54 points and Germany’s DAX flat.
The Euro STOXX 50 put/call ratio, one of Europe’s widely-used gauges of investor sentiment, has recently risen, signalling that equity investors have been hedging their portfolio against a potential market correction following the ECB announcement.
The ratio – which measures the trading volume of «put» options versus «call» options on the Euro STOXX 50 has risen to 1.64, data from Thomson Reuters Datastream shows.
A ratio below 1 usually signals bullishness, while a ratio above 1.5 usually signals that investors are turning cautious, buying «puts» as a hedge for their equity portfolios in case of a market sell-off.
The Euro STOXX 50 Volatility index (VSTOXX) has been sending a similar signal in the past few sessions. It has surged 10 percent in the past week, reflecting investors’ appetite for portfolio protection despite the market’s recent rally.
The VSTOXX, based on put and call options on Euro STOXX 50, is used to measure the cost of protecting stock holdings against market corrections as it usually moves in the opposite direction to cash equities.
Meanwhile, Japanese stocks ended at a near three-month high as the weak-yen trend supported the mood, but gains were limited as investors took a breather from recent sharp gains ahead of key events such as a US jobs report tomorrow.
The Nikkei ended 0.1 percent higher at 15,079.37, the highest closing level since March 11.
Source: Buenos Aires Herald