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Focus on ECB Chief’s Comments; Interest Rates

Dec 04,2014  Market News  Comment: 0

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New York City, New York – (StockNewsDesk) – 12/04/2014 — European and Asian shares managed to stay on the green side of trade. After lower than expected economic indicators showed that euro zone countries are inching towards recession, and the Chinese economy might face the worst Gross Domestic Product growth (GDP) in nearly 30 years, investors expect further expansion of the stimulus measures. This lifted investor optimism to some extent. Today’s speech by European Commission’s Chief Mario Draghi will decide the fate of European markets for the long run. The U.S. markets continued to stay mixed as ADP data came in below expectations, however, non-manufacturing data was well above the Street’s estimates. Today’s focus will stay on initial jobless claims data.

Economists believe the ECB will keep the interest rates unchanged at 0.05%. However, Mario Draghi might open the gates to more stimulus. The experts believe that Draghi will resort to organize a bailout, U.S. style. This will help the ECB pull the euro currency up from two-year lows. This will also kick-start the investment process that will help the limping economy get back on its feet. There is a good chance that stimulus measures will focus on the two-year low of manufacturing and factory activities. The debt-purchase schemes through government bonds might be expanded to revive economic growth and inflation.

Focus on ECB Chief’s Comments; Interest Rates

Germany, which has been opposed to the debt-purchase programs, remains an obstacle. The lawmakers will decide on the stimulus measures only after economic indicators for the first quarter are disclosed. Major Central banks across the globe have tried quantitative easing (QE), including countries like the United States and Japan. The U.S. Btried a QE strategy on multiple levels and was successful in turning the economy into growth. However, Japan failed miserably given that it stepped into recession in the earlier quarter. However, they did not face any opposition. The euro zone is in a tricky situation. The country is battling problems like deflation and dangerously low inflation rates of 0.3%; the economy might increase by just 0.1% and with the fall in crude oil prices the situation might just worsen.

Yesterday, the U.S markets remained mixed as the ADP job report came in below expectations. The ADP report came in above 200,000 for the eighth consecutive month. However, it fell short of expectations of 233,000. On an encouraging note, non-manufacturing Purchasing Managers Index (PMI) index came in at 59.1 compared to the Street’s expectations of 57. Today, investor optimism will depend on the economic indicators such as initial jobless claims and comments from ECB Mario Draghi.

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