The positive effects have already been priced in to some extent in recent days of the start of QE. Nevertheless, we await to see how trends develop as the measures announced go further than expected:
1/ Fall in the euro versus the USD, AUD, NZD and some EM currencies with a compelling risk/reward (INR, IDR, MXN, PHP; etc.), as the euro is used to finance carry trade strategies. The CNY, which is stable relative to the USD, should also automatically appreciate vs the EUR.
2/ Rise in eurozone equity markets (initially a confidence effect, then a lagged effect from the decline in the exchange rate, which would underpin EPS of eurozone companies).
3/ Fall in global bond yields: direct impact on the eurozone via the ECB’s asset purchases; indirect effect in the rest of the world via the implementation of carry trade strategies financed in euro.
4/ Out of sympathy, the European high yield market should also benefit from the ECB’s announcements