On Thursday, the European Central Bank announced that they would ‘begin purchasing government debts in March, eventually concluding their extended bond purchases by September 2016.’
As mentioned in previous installments, the central bank will purchase as much as 60 billion euros ($68 billion) worth of government debts each month, comprised of both private and public sector assets. The program will begin in March and continue until September 2016.
Of course, market investors and observers reacted with excitement.
Euro shares saw their biggest weekly gain in nearly three years, in the wake of QE’s announcement. Not only that, Greek shares saw a lot of that action, rallying on the eve of Sunday’s highly anticipated elections.
FTSEurofirst 300 Index finished the day’s trading with a 1.8 percent rally, settling at a seven-year high of 1,479.51 points. Overall, the index rallied an impressive 5.1 pct over the week, its strongest since late 2011.
The euro did decline, however. Friday trading saw the currency drop to as low as $1.1113 to the dollar.
Greek ATG share index increased as much as 6.1 percent. Greek financial institutions also rallied significantly—the Piraeus Bank, Attica Bank and the National Bank of Greece rose as much as 14 to 8.8 pct.
As of now, anti-bailout party Syriza is leading opinion polls. The party’s position regarding the country’s current bailout provisions looks to complicate the ECB’s intentions to address Greece’s financial issues.
Market analysts, however, do expect Syriza to ‘compromise’ with the nation’s central bank and the ECB should they gain power.
Should they gain power, Syriza leader Alexis Tsipras recently went on record to comment that ‘he’s certain that Greece would negotiate a solution that’s mutually acceptable by July.’ Greece will be eligible for the ECB bond buying program by that time.