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Stocks, oil soar on Draghi comments

Friday, January 22, 2016 - 01:40

Stocks and oil, at the forefront of a global market rout since the turn of the year, rebounded strongly thanks to hints of more monetary policy support by the European Central Bank and bargain-hunting by bruised investors. Laura Frykberg reports.

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A rare bit of respite for investors. World stocks have rebounded, in Asia they've had their best day in three months. Japan's Nikkei surging 5.9 per cent at the close, on speculation there may be further stimulus from the Bank of Japan. Meanwhile Europe's main indices rose about 2 percent for the second consecutive day. Possibly thanks to the soothing words of European Central Bank president Mario Draghi who's hinted at more monetary support. And says the bank is both 'determined and willing' to act to fulfil its mandate. But Panmure Gordon's Chief Economist Simon French isn't so optimistic. (SOUNDBITE) (English) CHIEF ECONOMIST AT PANMURE GORDON, SIMON FRENCH SAYING: "The problem of course is that at the moment, the words, which are very reassuring from Mario Draghi don't necessarily match up with the actions, because he has done an awful lot on the monetary side, but it hasn't exactly matched in terms of a fast recovery, and the Eurozone remains very, very tepid. " Oil too showed signs of recovering from 12-year lows to above $30 a barrel. That's after cold U.S. and European weather boosted demand. But many believe low prices are ultimately here to stay. (SOUNDBITE) (English) CHIEF ECONOMIST AT PANMURE GORDON, SIMON FRENCH SAYING: "My own view is still for fairly low oil prices, and this range of $30 to $40 a barrel seems the right range for me in 2016 given the huge glut on world markets. There have been warnings about $10 oil, $18 oil, I think that's overplayed. I think there are a few people jumping on the band wagon right now." And Moody's has taken note of oil's new lows. It's placed scores of oil and gas companies on review for a downgrade. Saying a slow recovery in oil prices will add to the stress on firms - already dealing with a 75 per cent drop since June 2014.

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Stocks, oil soar on Draghi comments

Friday, January 22, 2016 - 01:40