Defiant ECB helps market recoup losses

Mario Draghi's pledge that the European Central Bank would do "whatever it takes" to keep the euro together sparked a global rally that lifted local markets. The S&P/ASX200 finished higher after investors regained confidence, contributing to one of the market's biggest daily rises in seven months and helping the ASX recoup earlier losses.

Resource and financial stocks led the gains. Resource giants BHP Billiton and Rio Tinto rose (BHP finishing around $31.42 and Rio Tinto jumping about $1.49 to near $52), while major banks—including Commonwealth Bank (around $56.18), ANZ (about $23.08), National Australia Bank (about $24.25) and Westpac (about $23)—also moved higher and helped lift the broader market.

The article notes that several large companies, including BHP and Rio Tinto, flagged full‑year profits lower than expected and that earnings forecasts had been downgraded on average by about 5% over the past six months. For investors, that signals greater caution heading into the profit reporting season next month—watch company guidance, analyst revisions and sector trends rather than reacting to single headlines.

New data showed inflation slipped to a 13‑year low in the June quarter, which the article says clears the path for the Reserve Bank to cut the cash rate again if European conditions deteriorate further. Some banks and brokers withdrew earlier calls for an immediate cut, so investors should monitor inflation and global risks for clues on future RBA moves.

Several company-specific developments influenced share prices: Caltex fell to about $14.17 after committing to shut its Sydney plant and not guaranteeing the long-term future of 660 Brisbane refinery workers; Billabong rose to about $1.35 after appearing to cool on a $695 million takeover offer from US private equity group TPG; Woolworths lifted after reporting sales up 4.7% to $56.7 billion for 2011–12; Qantas shares rose after confirming talks with several airlines about potential alliances (including Emirates); and Leighton jumped after its mining arm Thiess won a $2.3 billion coal project contract.

Analysts were surprised by Draghi's comments that the ECB might restart bond purchases as Spanish government bond yields hit euro‑era highs and concerns grew that Greece could again need to restructure debt. Those risks initially pressured markets, but Draghi's commitment ultimately reassured investors enough to trigger a rally.

For the week the S&P/ASX200 gained 10.68 points, or about 0.25%, finishing near 4,209.8 points. That modest weekly rise—after midweek weakness—highlights that markets can swing on global policy statements and company news. Everyday investors should keep a medium‑term focus, diversify, and watch upcoming profit reports that could drive further volatility.

Although low inflation opened the door for another RBA cut, several large banks and brokers (including UBS, JPMorgan, HSBC and CBA) stepped back from earlier predictions that a cut would come next month. The change reflects uncertainty about how European developments and local economic conditions will influence monetary policy timing.