As traders bet on a Christmas present from the ECB, the timing of any Federal Reserve rate rise has been pushed into 2016, while some investors, despite Japanese government ministers recently arguing to the contrary, think the Bank of Japan could ease policy further, possibly at its meeting next week.
Across the Atlantic, index futures indicate the S&P 500 will add 22 points to 2,075, leaving it just 1.8 per cent below its record high hit in May.
The FTSE Eurofirst 300, a pan-European equity index, is also getting a boost from the falling single currency, helping it gain 1.9 per cent on Friday after jumping 2.1 per cent in the previous session to its best level since the late August sell-off.
Words matter greatly for investors, especially when a central banker sends a soothing message.
This week’s meeting of the European Central Bank in Malta was not expected to provide much joy for markets, but a liberal hint of additional easing and a surprise policy U-turn, seen arriving in December, has ignited the animal spirits of investors.
In the spirit of Back to the Future, investors have returned to the playbook that dominated markets in March, when the central bank launched its quantitative easing policy of buying €60bn of bonds a month. Bond yields for the likes of Spain and Italy in the two-year sector are turning negative, while the German benchmark has registered a new record low of minus 0.32 per cent.
An abrupt slide in the euro below $1.11, which only last week was flirting with $1.15, has powered a surge in equity prices, with the FTSE Eurofirst 300 climbing 4 per cent in less than 24 hours after Mario Draghi, ECB president, opened the door to a further cut in the current deposit rate of minus 0.2 per cent.
As investors relish the return of ECB largesse, the burning question is whether this can last and fatten investment returns before the year concludes?