Europe’s central bank head Mario Draghi prepares some sub-zero relief for wilting Eurozone

The euro and bond yields wilted in a sweltering Europe on Thursday as the European Central Bank signalled it was ready for even deeper sub-zero interest rates and to restart its mass bond buying programme.

The bank didn’t take any steps on the day but its easing intentions were clear. It left the euro at a two-month trough, sent German Bund yields back to record lows and nudged Europe’s main stock markets higher.

Traders were waiting for Mario Draghi’s afternoon news conference but German data had earlier added to the call for ECB action after it showed business morale in the bloc’s largest economy had hit its lowest since April 2013.

The ripple effect saw bond yields bow across Europe. As well as the Bund yield slide, neighbouring Switzerland’s 50-year government bond yield even went negative, meaning that none of its debt now offers buyers any interest.

The ECB “is clearly preparing for a package of policy easing in September,” said analysts at TD Securities, “We look for a dovish press conference now.”

Wall Street was also expected to open higher amid another blizzard of earnings. The S&P 500 and Nasdaq had both hit record highs on Wednesday after reassuring comments from Texas Instruments about global chip demand blunted the impact of weak earnings from Boeing and Caterpillar.