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Will The ECB Be Dovish Enough?

Published 12/09/2019, 11:09
Updated 03/08/2021, 16:15

Stocks are a little subdued this morning as traders await the European Central Bank (ECB) meeting at 12.45pm (UK time) and the press conference will follow at 1.30pm (UK time).

Today’s ECB update has been long awaited, as speculation about a stimulus package has been doing the rounds for some time. The ECB deposit rate is -0.4%, and there is talk it will be cut further into negative territory, and speculation about a government bond buying scheme has been doing the rounds too. Equity traders appear to be sitting on their hands ahead of the announcement, and there are some concerns the ECB won’t be dovish enough to satisfy dealers demands.

Stocks in China traded higher after President Trump announced he will delay the next round of tariffs on Chinese imports by two weeks. The US were due to impose tariffs on $250 billion worth of Chinese imports in early October, and that has been pushed back to mid-October. It was a small gesture of goodwill, but it sent the right message.

Morrisons (LON:MRW) shares are higher this morning after the company posted positive first-half figures. First-half pre-tax profit before one-off items increased by 5.3% to £198 million, which topped the £192 million forecast. The retailer is on track to achieve £1 billion of annualised wholesale supply sales target, and this highlights the benefits of diversification into wholesales. The group announced a special dividend of 2p, which took the total interim dividend to 3.93p. The fact the group is paying special dividends underlings the firm’s successful turnaround plan.

N Brown (LON:BWNG) shares sold-off this morning on the back of the news the company will have to set aside between £20 million and £30 million in relation to the payment protection insurance (PPI) mis-selling scandal. The deadline to claim PPI compensation was August, and the group saw a rush in compensation claims being made. The group was not the only one to be stung by a surge in PPI claims, as Lloyds (LON:LLOY), RBS (LON:RBS) and Barclays (LON:BARC) also revealed new provisions recently.

Workspace (LON:WKP) announced that it disposed of two properties in London for a total of £34.8 million. The sales prices equate to a 20% premium on the valuations that were assigned to the properties in March.

EUR/USD was given a lift on the back of the French CPI reading which edged up to 1.3% from 1.2%. The reading is still soft, but at least it is heading in the right direction, and it suggests that demand is on the increase, albeit at a slow pace. Euro volatility is likely to be low on the run up to the ECB update.

Kroger (NYSE:KR) will be in focus as the retailer will post its second-quarter figures today. The company has been undergoing a restructuring scheme in an effort to keep up with the changes of the grocery sector. Kroger secured an agreement with Ocado (LON:OCDO) to tap into online market, and to fend off the likes of Amazon (NASDAQ:AMZN).

We are expecting the Dow Jones to open 63 points higher at 27,200 and we are calling the S&P 500 up 6 points at 3,006.

DISCLAIMER: 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.

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