European markets track Wall Street advance
• ECB might have acted if the meeting was two weeks ago
• Supermarkets jump on M&A spec
• US stocks head for higher open
At least for a few days, concerns over China can be put to one side
while the country closes its exchanges to celebrate seventy years since the end of World War 2. European markets made headway in morning trading, tracking an advance on Wall Street yesterday ahead of what is expected to be a dovish ECB meeting.
Logically the ECB should revise down its inflation forecasts
given that the price of oil has fallen significantly since the last meeting. On July 16 Brent crude was priced at $57 per barrel, it fell over 25% to $42 per barrel just over a month later on August 24th, though it has subsequently bounced over $50. A more dovish inflation forecast is likely to be accompanied by the affirmation that the size and/or duration of quantitative easing can be increased if necessary.
Had the meeting taken place two-three weeks ago at the height of the market volatility
, the ECB might have increased the size or duration of the program or even enabled a wider range of asset purchases by lowering the deposit rate. It seems unlikely the ECB will do anything this time with the Fed possibly set to act two weeks later.
Mostly positive service sector data
released on Thursday shows Eurozone economic activity continues to expand despite a modest slowdown in manufacturing.
Easyjet led the gainers in the FTSE 100
after a bumper August allowed the budget airline to raise its full-year profit guidance. Morrisons' shares jumped over 4%
ahead of its earnings next week on reports South African billionaire Christo Wiese may be looking to build on his UK acquisitions of New Look and Virgin Active in the supermarket sector.
Forecasts of stronger iron ore demand from Rio Tinto lifted base metal prices and helped Britain’s mining stocks to solid gains whilst the EU approval of the Shell-BG deal and a bounce in oil prices yesterday lifted energy shares.
US stocks look set for a higher open
in a further recuperation of Tuesday’s steep losses ahead of the ISM non-manufacturing report, the last significant piece of economic data before Friday’s jobs numbers.
US equity market calls
: 10 points higher at 1,958
: 76 points higher at 16,427
: 31 points higher at 4,287
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