Thursday preview: ECB meets amid QE bets

European Central Bank (ECB) meets on Thursday amid pressure to boost stimulus measures to address low inflation and weak economic growth in the euro-area.

With inflation sitting well below the ECB’s target of just under 2%, speculation on whether the central bank will take action in the form of full-blown quantitative easing (QE) continued to rise.

Adding fuel to QE bets was the Eurozone inflation report on Tuesday which showed consumer prices eased back to 0.3% year-on-year in September, as expected, from 0.4% a month earlier.

“We think the odds that the ECB will engage in QE have risen well beyond the 50% mark, although it is not on a pre-set course,” Elwin de Groot, senior Eurozone strategist at Rabobank, said in a note on Wednesday.

The analyst said the September easing package, notably the open-ended asset backed securities (ABS) package, gave the impression of a “hastily cobbled together response to falling inflation expectations”.

“By linking a balance sheet target (the stated claim of a significant B/S increase) to a set of measures that are inherently of a credit easing nature, the ECB and Mr. Draghi have put themselves into a corner,” de Groot added.

“If significant balance sheet expansion cannot be achieved (which, in our view, is very doubtful indeed), the market will conclude that the next and final step (i.e., proper QE in the form of large scale government bond purchases) is all but unavoidable.”

Thursday 2 October

INTERIMS
Ted Baker

INTERIM DIVIDEND PAYMENT DATE
Amlin, BBGI SICAV S.A. (DI), Hammerson, Phoenix Group Holdings (DI)

QUARTERLY PAYMENT DATE
Blackrock North American Income Trust , GlaxoSmithKline

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Continuing Claims (US) (13:30)
ECB Interest Rate (EU) (12:45)

ECB president Mario Draghi press conference (EU) (12:45)
Factory Orders (US) (15:00)
Goods Orders (US) (13:30)
Initial Jobless Claims (US) (13:30)
Producer Price Index (EU) (10:00)
GMS
Red Rock Resources

FINALS
Firestone Diamonds
IMSS
Carillion
EGMS
European Convergence Development Co
AGMS
Artemis Alpha Trust, Zibao Metals Recycling Holdings

TRADING ANNOUNCEMENTS
Tate & Lyle
UK ECONOMIC ANNOUNCEMENTS
Financial Policy Committee statement from its policy meeting, 26 September (9:30)
PMI Construction (09:30)
FINAL DIVIDEND PAYMENT DATE
Diageo