ETX Capital Daily Market Bite 5th June 2014: Low Market Activity due to pending ECB meeting
June 5, 2014 9:43 am
European equity markets were broadly flat early Thursday as market participants refrained from taking bold bets ahead of what could be one of the most historical European Central Bank policy meetings, expected later.
Data this week from the euro area showing declines in business activity and further falls in inflation certainly warrant policy action by the ECB which is widely priced-in by markets following weeks of speculation. Most are of the view that the ECB may launch a stimulus package but are unsure of what it consists.
Consensus believes that the ECB could possibly cut interest rates and take the deposit rate to negative territory together with liquidity boosting measures which may spur lending and possibly, a bond-buying QE programme.
Much of the focus will be on ECB head Draghi who is widely expected to offer more clarity on the ECB’s economic growth forecasts for this year and ahead — his press conference following the rate cut will be eagerly awaited.
Overnight in Asia, equity markets were trading flat, lacking volatility on a quiet news day. Some focus on Australian equities after April’s trade balance unexpectedly turned to a deficit despite continued strong mineral exports.
The ASX remained in negative territory following the release but came off session lows. Meanwhile, the Japanese yen strengthened 0.2% against the US dollar on the back of cautious stance from investors.
Back in Europe, of course the focus will be on the ECB but market participants are digesting the good news out of Germany where factory orders rebounded in April from the biggest plunge in more than a year. Orders, adjusted for seasonal swings and inflation, increased 3.1% from March, when they declined 2.8%.
Over in the UK, the Bank of England could possibly keep policies unchanged with rates at 0.5% and may keep the QE at £375billion — there is undoubtedly more pressure the BOE to respond to the inflated house prices in the UK which may suggest that the country’s property market, particularly London, is undergoing a bubble due to various schemes such as Help to Buy.
Later, market participants will keep their eyes on US weekly jobless claims following Wednesday’s weaker than expected ADP report and Friday’s nonfarm payrolls data.
European equity markets were broadly flat early Thursday as market participants refrained from taking bold bets ahead of what could be one of the most historical European Central Bank policy meetings, expected later.
Data this week from the euro area showing declines in business activity and further falls in inflation certainly warrant policy action by the ECB which is widely priced-in by markets following weeks of speculation.
Most are of the view that the ECB may launch a stimulus package but are unsure of what it consists.
Consensus believes that the ECB could possibly cut interest rates and take the deposit rate to negative territory together with liquidity boosting measures which may spur lending and possibly, a bond-buying QE programme.
Much of the focus will be on ECB head Draghi who is widely expected to offer more clarity on the ECB’s economic growth forecasts for this year and ahead — his press conference following the rate cut will be eagerly awaited.
Overnight in Asia, equity markets were trading flat, lacking volatility on a quiet news day. Some focus on Australian equities after April’s trade balance unexpectedly turned to a deficit despite continued strong mineral exports.
The ASX remained in negative territory following the release but came off session lows. Meanwhile, the Japanese yen strengthened 0.2% against the US dollar on the back of cautious stance from investors.
Back in Europe, of course the focus will be on the ECB but market participants are digesting the good news out of Germany where factory orders rebounded in April from the biggest plunge in more than a year.
Orders, adjusted for seasonal swings and inflation, increased 3.1% from March, when they declined 2.8%.
Over in the UK, the Bank of England could possibly keep policies unchanged with rates at 0.5% and may keep the QE at £375billion — there is undoubtedly more pressure the BOE to respond to the inflated house prices in the UK which may suggest that the country’s property market, particularly London, is undergoing a bubble due to various schemes such as Help to Buy.
Later, market participants will keep their eyes on US weekly jobless claims following Wednesday’s weaker than expected ADP report and Friday’s nonfarm payrolls data.
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