European stocks kicked off Monday with gains, inspired by comments from European Central Bank President Mario Draghi who surprised many with comments at Jackson Hole, Wyo. suggesting that further stimulus could be on the way for the region.
“He feels action may be needed to boost demand in Europe, and this will see markets start to price in probability for further stimulus in the near term,” said Stan Shamu, market strategist at IG, in a note. “The result was a drop in the euro today and is also likely to support European equities.”
The Stoxx Europe 600 index SXXP, +0.65% rose 0.7% to 339.05, after a gain of 2.1% last week. End-of-week tensions surrounding Ukraine and Russia triggered some losses for Europe stocks Friday.
France’s CAC 40 index PX1, +1.06% rose 1% to 4,299.29, while the German DAX 30 index DAX, +1.15% gained 1.2% to 9,448.54. Outside of the fact that many traders are taking vacation, a London holiday for Monday may weigh on volumes.
What Draghi said:
“Everyone in society is affected by high unemployment. For central banks it is at the heart of the macro dynamics that determine inflation, and even when there are no risks to price stability it increases pressure on us to act,” Draghi said, according to a summary of the speech made available by the ECB.
Draghi was speaking at the Kansas City Federal Reserve’s annual symposium in Jackson Hole, Wyo. on Friday. He argued that more unconventional action may be needed, but that increased flexibility on fiscal policy across the region and efforts to overhaul the labor market are crucial. The remarks were a hint that bigger countries in healthy shape need to do more drive demand.