The ECB had a major impact on financial markets over the past month

Photo: Sean Gallup/Getty Images

Central Banks remain a key driving force behind movements in financial markets.

Just take a look at this excellent chart from Deutsche Bank for evidence.

Source: Deutsche Bank

It shows the performance of various asset classes so far in 2017, as well as since European Central Bank (ECB) president Mario Draghi delivered what was perceived to be a hawkish speech a month ago at the ECB’s Central Banking Forum in Sintra, Portugal.

“All the signs now point to a strengthening and broadening recovery in the euro area,” Draghi said at the event, adding “we can be confident that our policy is working and its full effects on inflation will gradually materialise”.

His words had an immediate impact, seeing European bond yields and the euro rise sharply in response.

And, seen in the chart below, that’s also rippled out across broader asset markets over the past month.

European stocks have fallen, while those in other parts of the world have largely risen. The US dollar has tumbled, underpinning gains in other major currencies. Commodities have also performed well, partially in response to US dollar weakness.

Other than providing a great update as to how major asset classes have performed this year, it also provides a gentle reminder that central bank’s have lost none of their market-moving clout.

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