Tuesday, March 1, 2016

DAX30: index is growing on the expectations of the ECB decisions on 10 March

Despite negative European news European stock indices are growing. It seems that the growing number of negative news from Eurozone increases confidence of the market participants that QE program will be expanded at the ECB meeting on 10 March.

The data released earlier has confirmed deterioration of economic situation in Eurozone. It became known that annual consumer price indices in February fell to -0.2% against the forecast of 00%.

Today, business activity indices in the manufacturing and service sectors of Spain Italy and France became known. They were below the forecast.

According to the data released last week, German indices of economic expectations and business confidence, as per IFO fell in February. The indices of economic sentiment, business confidence and consumer confidence also fell in February (0.07/103.8/-8.8 against the forecast of 0.28/104.4/-6.7 respectively).

At the meeting of G20 last weekend Finance Ministers did not reach agreement on stabilization of international markets and economic growth incentives. G20 countries have not developed a common plan to improve situation or prevent slowdown of the global economy.

Gloomy prospects of the global economy, mentioned at the meeting and deterioration of the economic situation in Eurozone might force ECB to introduce additional incentive measures.

Note that President of New York Fed William Dudley said yesterday that downside risks to the US economy are increasing and the US Fed should leave the target range of the interest rate at 0.25%-0.50% due to decline of inflation expectations. Dudley’s opinion confirms that the world’ economy is bearing high risks.

In the current economic situation it is possible that ECB will expand QE easing program at the meeting on 10 March. If it happens it will add momentum to the European stock indices, including NASDAQ DAX30.