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by Peter Switzer

The reason for the solid gains was the bond-buying program agreed to by the European Central Bank (ECB) and that was the guts of what its president — Draghi — announced last night.

The bond program, Drahi said, would be designed to ensure monetary policy worked in Europe and that raises the prospects of cheaper money for the likes of Spain and Italy, better economic growth across the European Union, which then spreads to China helping commodity prices, business confidence, investor confidence, etc.

And what’s good is that the market has given this a thumbs up even though there was no 0.25 per cent cut in interest rates, which was expected.

Adding to the US optimism was a good Institute for Supply Management report for non-manufacturing. Plus the ADP jobs survey for the US private sector came in at 201,000 when only 145,000 was expected.\

This has raised hopes that the official jobs report tomorrow could be a beauty.

Be clear on this, the ECB program is a giant step in the right direction away from the ‘woods’ we need to get out of before a bull market rally is cemented in. Lots of other better developments need to happen but we’re heading in the right direction and our stock market will show it today.

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Published on: Friday, September 07, 2012