Draghi Put Triggered After Worst Europe Stock Selloff Of ?15
By ?Sofia Horta E Costa
Now they?re buying the dip in Europe, too.
The Stoxx Europe 600 Index climbed 1.8 percent on Wednesday, the most in a month, to stanch a streak of declines that stretched to six days. It?s a pattern that is playing out with more frequency: the last two declines that lasted as long ended in gains of more than 7.5 percent in the following month.
Even with lingering concerns over Greece, European Central Bank stimulus is providing a floor to drops as traders increasingly view them as buying opportunities. With profit growth forecast to outpace the U.S. this year and valuations coming off decade highs, investors who hid in cash while waiting out the selloff are inclined to jump back in.
?QE is a very powerful tool, and markets will continue to have that support,? said James Butterfill, the head of global equity strategy at Coutts & Co. in London. ?The European story is undamaged — corporate earnings will do well and relative valuations are even more attractive.?
The Stoxx 600 lost as much as 7.3 percent from its April record, closing at its lowest level since February on Tuesday. It added 0.6 percent on Thursday.
The selloff took shares to a level approaching what technical analysts call oversold, or when drops have gone too far. The benchmark gauge?s relative strength index came near 30 for the first time since December. That?s when the Stoxx 600 was about to start its biggest quarterly jump since 2009.