There was a distinct divergence between US and European markets yesterday with European shares rallying and US sinking with the Dow off 100 points. There was a late rally in Europe with equities underpinned by a weak euro and quantitative easing kicking off today. The US dollar index broke to new multi-year highs, leaving US companies with the prospect of lower foreign earnings and a hike in interest rates to deal with. On Thursday, US stocks are set to open essentially unchanged from yesterday’s closing levels with the eventual direction likely to be heavily determined by the outcome of the meeting of the European Central Bank. Investors will be looking for clues as to the expected length of the ECB’s QE program and how it will determine when to stop, how the purchases will be carried out, which assets will be bought and whether there will be enough assets to buy. The ECB may choose to adjust interest rates now that QE has come in and it will be updating growth and inflation forecasts. There is also the issue of Greece and the ECB’s arguably politicized participation in that ongoing saga. There are so many variables surrounding the ECB’s meeting that the market may well end up being pulled in multiple directions making little headway up or down. The clearest variables the central bank could use to signal its intensions to the market will be through adjustments to interest rates and growth/inflation targets. Raising the deposit rate back out of negative territory and/or increasing the growth forecast could be interpreted as minimising the monetary easing and be positive for the euro and negative for stocks. Keeping NIRP on the deposit rate and reducing the inflation forecast could be seen as more aggressive easing and be euro-negative and good for stocks. Earnings are expected from Costco, Kroger and Martha Stewart on Thursday. Futures suggest the: S&P 500 will open unchanged at 2,098 with the Dow Jones expected to open 7 points higher at 18,103 and the Nasdaq 100 unchanged at 4,445. CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.