The Dow Jones industrial average soared 212 points Thursday after the president of the European Central Bank asserted that he will “do whatever it takes” to preserve Europe’s shared currency, but Massachusetts companies remained concerned about the continent’s financial troubles and their effects here.
At luxury retailer LuxCouture in Newton, where European products make up 25 percent of the inventory, owner Sari Brown said she is adopting a wait and see attitude.
“The European products are selling really well, but the instability in Europe has made it much more difficult to deal with the European market,” she said. “I don’t expect that to change right away.”
Europe accounts for 40 percent of Massachusetts exports, about double the US average. More than two dozen of the state’s public companies get at least a third of their revenue from overseas, mostly from Europe, according to the financial reporting firm Standard & Poor’s. In addition, European companies invest billions of dollars in Massachusetts and employ more than 100,000 people here. And European tourists account for nearly half of all spending by international visitors in the state.
The news from Europe did not make Luciano Manganella, owner of the local clothing chain Shop 344, feel any better about the economy. Concerned about conditions in general, Manganella has been putting off a planned expansion of his 100-person workforce.
“It’s the same story,” he said. “Until all of the European countries agree to have the same labor and socialistic laws, the union will always be in turmoil.”
Thursday’s remarks by European Central Bank president Mario Draghi raised hopes that the bank might intervene in markets to reduce the high borrowing costs for struggling countries such as Spain and Italy.
“The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough,” Draghi told an investment conference in London.
Local businesses “can breathe a little easier now,” said Andre Mayer, senior vice president of research at the Associated Industries of Massachusetts, the state’s largest employers group, “because an important player has finally said what people want to hear: that the central bank intends to back the euro.”
Draghi’s comments will probably not forestall a “rather serious” recession in Europe, Mayer said, but they do decrease the likelihood of “a full-scale meltdown of European and global financial system.”
Sara L. Johnson, senior research director of global economics at Lexington forecasting firm IHS Global Insight, said that Draghi’s statement “is good news because it reduces the odds of a worst-case scenario, a financial collapse.”
But Johnson said that she has not changed her forecast for the European economy, which she expects “will continue to struggle throughout 2013,” adding it is unlikely to be “a source of growth” for Massachusetts companies in the year to come.
European and US stock markets, reacted positively to Draghi’s speech. The Dow moved into positive territory for the week, closing up nearly 1.7 percent, at 12,888. European markets also rose, breaking a four-day losing streak.