Deutsche Bank (DB), like many stocks in the European market, has had a strong run over the past several trading sessions. The reason for the gains is relatively simple. With the Bank of England stimulus in mind, investors are hoping for further stimulus actions out of the European Central Bank. Today, we’ll talk about the stimulus news, what it has to do with Deutsche Bank, and what we can expect to see from the stock moving forward.
BOE Stimulus Adds To Hopes Of Increased ECB Stimulus
The European Central Bank has long taken a wait and see approach to economics and economic stimulus. Historically, the central bank makes relatively small moves. Then they sit back and watch to see how these moves affect economic conditions. However, drastic economic stimulus actions made swiftly aren’t really the style of the ECB. Nonetheless, investors are hoping that this is exactly what we’re going to see from the central bank soon.
Much of the hopes of increased stimulus from the ECB is the result of the stimulus news that was recently released out of the Bank of England. In a surprising move, the BOE made the decision to not only reduce its interest rate and expand quantitative easing in a big way, they’ve also set up up to 100 billion pounds of funds to make sure that savings trickle down to the end consumer. This, all in the wake of the Brexit vote.
As a result, investors are taking note. The way they see it, the Brexit vote has already had a dramatically negative affect on the European economy and has been met by little from the ECB. With the BOE moving forward with such heavy stimulus efforts, it’s fair to believe that the ECB will soon need to do the same thing.
What Does This Have To Do With Deutsche Bank Stock?
From the outside looking in, it may seem as though Deutsche Bank stock and economic stimulus from central banks are two completely different topics. However, that couldn’t be further from reality. At the end of the day, Deutsche Bank is one of, if not the largest banking stock in Germany. Germany is the powerhouse economy of Europe. As a result, any movements from the ECB are likely to cause movement in the value of Deutsche Bank.
