Katherine Judge and Avery Shenfeld, analysts at CIBC, explained that during 2015, when the European Central Bank launched a QE program, equity prices rose but the rally was short-lived. They see that economic indicators need to improve in order to see stocks higher.
Key Quotes:
“Less than a year after the ECB announced it was closing the books on QE that started in 2015, policymakers are preparing to re-start a bond-buying program. ECB President Draghi cited deteriorating economic data in Europe as resulting in a “worse and worse” outlook for the region. While QE lifted stocks when it was first announced in 2015, there likely won’t be a repeat this time around. Real GDP growth was on more solid footing at that time, but has disappointed lately”
“The impact from QE on stocks in 2015 was reversed in a matter of months. Rather than a quick bounce from a QE announcement, eurozone equity gains will have to await better news from actual growth indicators.”
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