ECB meets amid worsening trade situation

All eyes are on the ECB today, with the dovish outlook confirmed by another cut by the Reserve Bank of India.
- Europe looks for dovish ECB tone
- India cuts rates
- US and Mexico still at loggerheads
Gains in Europe so far appear to be based on the idea that the ECB will issue a supportive statement this afternoon, helping to maintain the recovery in risk appetite witnessed over the past few days. The global central bank outlook continues to shift in the dovish direction, with Jerome Powell’s speech earlier in the week driving hopes of Fed movement, and a cut in rates by the Indian central bank has only reinforced the impression that monetary policy is moving in an accommodative way. While eurozone GDP was better than expected in Q1, the outlook remains uncertain, which may help prod Mario Draghi to err on the dovish side. European indices are trading in a positive, but cautious fashion, but the FTSE 100 is enjoying a strong day, shrugging off ex-dividend movements from Taylor Wimpey and Sainsbury’s.
Away from the ECB, the market continues to fret that trade wars will be a major drag on growth. The US and Mexico do not appear to be any closer to resolving their differences, and a widening of trade tensions will do little for global growth, as the IMF has noted. A speech from Fed member Williams and initial jobless claims will act as a warm-up for tomorrow’s non-farm payrolls, with yesterday’s ADP miss putting markets on notice for a weaker NFP print.
Ahead of the open, we expect the Dow to start at 25,606, 67 points up on Wednesday’s close.
Author


















