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Mario Draghi is having no success convincing stock investors that the European Central Bank has the firepower to reignite growth.
While all economists in a Bloomberg survey expect the central bank to cut interest rates when policy makers meet Thursday, and 73 percent project them to boost the amount of money put into the financial system through bond purchases, fund managers aren’t optimistic about a post-decision equity rally. In the first year of quantitative easing, the Euro Stoxx 50 Index fell 17 percent, and volatility reached levels not seen since 2008. The gauge has dropped in each month but one following an ECB meeting since April.
“It won’t be easy for Draghi to bring back confidence in the recovery,” said Andreas Nigg, head of equity and commodity strategy at Vontobel Asset Management in Zurich. “Growth and inflation in Europe remain stuck at low levels and earnings revisions continue to fall. The market needs better earnings revisions and better economic surprises. ”
