Europe

ECB Cuts Rates. As expected ECB has cut its interest rates to record lows while imposing negative rates on its overnight depositors, meaning that commercial banks will have to pay to leave money in the central bank, rather than receive interest. Base interest rate is reduced to 0.15% from 0.25% while the deposit rate is lowered to -0.1%. The move is unprecedented and it’s the first of the “Big Four” central banks (the other three being the US Federal Reserve, the Bank of Japan and the Bank of England) to do this. Though Japan has pioneered the zero interest rate policy or ZIRP, ECB should be credited for negative interest rate policy (NIRP). What has surprised the market is that ECB president Mario Draghi looks to be considering QE – purchases of “asset-backed securities” as he calls it – as part of the measures. (Please refer to Economic Viewpoint for further comments)

Bank Of England Holds UK Interest Rates At 0.5%. UK interest rates have been held at the record low of 0.5% for another month by the Bank of England. The size of the Bank's bond-buying economic stimulus programme was also kept unchanged at £375bn. The decision was widely expected, despite continued signs of strength in the UK economy. Last month, the Bank of England reiterated it was in no rush to raise rates, with governor Mark Carney saying they may remain low "for some time". However, Mr Carney added the economy had "edged closer" to the point where interest rates would need to rise. (BBC)

USA

Jobless Claims Data Points To Strong Labor Market. The number of Americans filing new claims for unemployment benefits rose last week, but the underlying trend continued to point to a firming labor market. Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 312,000 for the week ended May 31, the Labor Department said on Thursday. Economists polled by Reuters had forecast first-time applications for jobless aid rising to 310,000 last week. (Reuters)

Consumer Comfort In U.S. Improves For First Time In Five Weeks. Consumer sentiment rose for the first time in five weeks as Americans, particularly women, grew more upbeat about the economy, finances and the buying climate. The Bloomberg Consumer Comfort Index rose to 35.1 from 33.3 a week earlier. The gauge of whether it’s a good time to spend advanced by the most in more than a year, while views on the economy were the best in five weeks. (Bloomberg)

Household Wealth In U.S. Increases As Home Values Appreciate. Household wealth in the U.S. climbed in the first quarter, helped by labor market improvement and gains in the stock and residential real estate markets that are giving balance sheets a lift. Net worth for households and non-profit groups increased by $1.49 trillion from January through March, or 1.9 % from the previous three months, to $81.8 trillion, the Federal Reserve said today from Washington in its flow of funds report. (Bloomberg)

Currencies

Euro Swings Higher As Investors Assess ECB Stimulus. The euro swung to a gain against the dollar Thursday, recovering from a four-month low, after the European Central Bank unveiled a series of measures aimed at reviving inflation in the euro zone. The euro reversed earlier losses, rising to $1.3664 from $1.3605 late Wednesday. In the wake of the ECB decision, the euro had touched its lowest level against the dollar since February 5, according to FactSet. The ICE Dollar Index, a measure of the currency’s strength against six rivals, fell to 80.350 from 80.668 late Wednesday. In other action, the British pound rose to $1.6818 from $1.6738 late Wednesday. The dollar fell to 102.43 yen from ¥102.75 late Wednesday. The Australian dollar rose to 93.37 U.S. cents from 92.77 U.S cents. (Market Watch)

Commodities

Brent Crude Oil Futures Rise As European Oil Demand Seen Higher. Brent crude oil futures rose and U.S. crude oil pared losses on Thursday in choppy trading as the euro and dollar reacted to the European Central Bank's (ECB) interest rate cut and investors anticipated growing oil demand in Europe. U.S. crude lost 16 cents to settle at $102.48, It recovered after dropping to $101.60, its lowest since May 16. Brent crude rose by 39 cents to settle at $108.79 a barrel, after dropping to $107.77, its lowest since May 9. (Reuters)

Gold Jumps 1 Pct After ECB Rate Cut, Easing Measures. Gold jumped 1 % on Thursday, rising further from this week's four-month low, after the European Central Bank cut interest rates to record lows and its chief Mario Draghi unveiled a package of new stimulus measures. Spot gold was up 0.8 % at $1,252.15 an ounce at 1308 GMT, off a high of $1,256.50. It earlier dipped as low as $1,240.90, close to this week's four-month low of $1,240.61. Among other precious metals, silver gained 1 % to $18.93 an ounce, while platinum was up 0.3 % to $1,435.80 an ounce and palladium rose 0.3 % to $836.22 an ounce. (Reuters)