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ECB press conference: Markets surge as Draghi hints at more QE - as it happened ECB press conference: Markets jump as Draghi hints at more QE - as it happened
(35 minutes later)
5.30pm BST17:305.30pm BST17:30
Draghi rally sends shares up, euro downDraghi rally sends shares up, euro down
Europe’s stock markets have just shut for the day, with big gains across the board as investors anticipate more stimulus measure from the ECB.Europe’s stock markets have just shut for the day, with big gains across the board as investors anticipate more stimulus measure from the ECB.
The FTSE 100 closed up 110 points, or 1.8%, at 6194 - further away from the losses suffered a week ago.The FTSE 100 closed up 110 points, or 1.8%, at 6194 - further away from the losses suffered a week ago.
All the main indices jumped, as Mario Draghi’s warnings of lower growth and weaker inflation triggered expectations of more bond-buying from Europe’s central bank.All the main indices jumped, as Mario Draghi’s warnings of lower growth and weaker inflation triggered expectations of more bond-buying from Europe’s central bank.
Marchel Alexandrovich of Jefferies, the investment bank, says Draghi gave a clear signal that he would act if needed:Marchel Alexandrovich of Jefferies, the investment bank, says Draghi gave a clear signal that he would act if needed:
Facing a deterioration in the external environment, the ECB nudged down its economic forecasts and opened the door for potentially increasing the scale of the QE programme. All-in-all, the changes to its macroeconomic forecasts were fairly marginal; but to put things into perspective, this is a first downgrade to the euro area’s prospects since last December, so the changes may be small, but they are symbolically important......Facing a deterioration in the external environment, the ECB nudged down its economic forecasts and opened the door for potentially increasing the scale of the QE programme. All-in-all, the changes to its macroeconomic forecasts were fairly marginal; but to put things into perspective, this is a first downgrade to the euro area’s prospects since last December, so the changes may be small, but they are symbolically important......
As in March and in June, the ECB is on the record stating that it is prepared to ease policy if data does not meet expectations. At a time of heightened global uncertainty, even such a simple message is a good start.As in March and in June, the ECB is on the record stating that it is prepared to ease policy if data does not meet expectations. At a time of heightened global uncertainty, even such a simple message is a good start.
And that has left the euro sharply down tonight; it has shed more than one cent against the US dollar to languish around $1.1107And that has left the euro sharply down tonight; it has shed more than one cent against the US dollar to languish around $1.1107
For a full summary, check out the key points from Draghi’s press conference.For a full summary, check out the key points from Draghi’s press conference.
I’ll be back tomorrow, when we get the latest US jobs data. Goodnight. GWI’ll be back tomorrow, when we get the latest US jobs data. Goodnight. GW
Updated at 5.34pm BSTUpdated at 5.34pm BST
4.48pm BST16:484.48pm BST16:48
Investec have sent over a handy explanation of the tweaks that the ECB is making to its asset purchase plan (announced early in today’s press conference):Investec have sent over a handy explanation of the tweaks that the ECB is making to its asset purchase plan (announced early in today’s press conference):
The change will see the Public Sector Purchase Programme issue share limit raised from 25% to 33%, except where the Eurosystem would have a blocking minority.The change will see the Public Sector Purchase Programme issue share limit raised from 25% to 33%, except where the Eurosystem would have a blocking minority.
This change appears to be aimed at reinforcing views that the ECB maintained full control over its purchases and could work easily around market impediments; indeed Mr Draghi said it was meant to ensure the continued smooth functioning of the programme.This change appears to be aimed at reinforcing views that the ECB maintained full control over its purchases and could work easily around market impediments; indeed Mr Draghi said it was meant to ensure the continued smooth functioning of the programme.
We note that Germany in particular could have found itself running up against the 25% limit, so the adjustment today should support the ECB, for example, in buying its full allocation for Germany.We note that Germany in particular could have found itself running up against the 25% limit, so the adjustment today should support the ECB, for example, in buying its full allocation for Germany.
4.21pm BST16:214.21pm BST16:21
Ranko Berich, Head of Market Analysis at Monex Europe, reckons the European Central Bank will set sail on QE2 soon, following today’s “unambiguously dovish” press conference:Ranko Berich, Head of Market Analysis at Monex Europe, reckons the European Central Bank will set sail on QE2 soon, following today’s “unambiguously dovish” press conference:
“Draghi presented a double-whammy of pessimism, with additional downside risks from recent market volatility adding to the already downgraded growth and inflation forecasts.”“Draghi presented a double-whammy of pessimism, with additional downside risks from recent market volatility adding to the already downgraded growth and inflation forecasts.”
Should we see the very real risks of free-falling commodity prices and a weakened growth outlook begin to weigh down on inflation prospects, Draghi has shown his intention to act by altering the duration, composition, or size of QE.Should we see the very real risks of free-falling commodity prices and a weakened growth outlook begin to weigh down on inflation prospects, Draghi has shown his intention to act by altering the duration, composition, or size of QE.
Unless some upside price pressure materialises, the ECB will be forced to follow the Fed and Bank of Japan in a second QE programme.”Unless some upside price pressure materialises, the ECB will be forced to follow the Fed and Bank of Japan in a second QE programme.”
4.07pm BST16:074.07pm BST16:07
Enrique Diaz Alvarez, Chief Risk Officer and Currency Expert at Ebury, predicts that the euro will continue to weaken in the months ahead.Enrique Diaz Alvarez, Chief Risk Officer and Currency Expert at Ebury, predicts that the euro will continue to weaken in the months ahead.
Here’s why:Here’s why:
“The ECB is committed to easier monetary policy, and today’s press conference has reaffirmed that this commitment explicitly includes a lower euro.“The ECB is committed to easier monetary policy, and today’s press conference has reaffirmed that this commitment explicitly includes a lower euro.
“While there were no changes to the ECB policy stance, President Draghi sent the Euro sharply lower right at the start of the press conference with comments and projections that were extremely dovish.“While there were no changes to the ECB policy stance, President Draghi sent the Euro sharply lower right at the start of the press conference with comments and projections that were extremely dovish.
“He specifically mentioned a weaker Euro as a key lever to the European economic recovery. Inflation and growth forecasts were also slashed, with Draghi suggesting that we may see negative inflation again soon.“He specifically mentioned a weaker Euro as a key lever to the European economic recovery. Inflation and growth forecasts were also slashed, with Draghi suggesting that we may see negative inflation again soon.
“In light of this, our view is that the common currency will resume a gently depreciating path against most other major currencies over the coming months, particularly against the US dollar.”“In light of this, our view is that the common currency will resume a gently depreciating path against most other major currencies over the coming months, particularly against the US dollar.”
3.55pm BST15:553.55pm BST15:55
3.45pm BST15:453.45pm BST15:45
Mario Draghi’s ability to move the markets without actually doing anything has left Marc Ostwald of ADM Investor Services shaking his head in admiration.Mario Draghi’s ability to move the markets without actually doing anything has left Marc Ostwald of ADM Investor Services shaking his head in admiration.
The sleight of hand in terms of a renewed dose of ‘all talk and no action’ was once again masterful, above all in emphasizing the ECB’s dovishness and hefty easing bias.The sleight of hand in terms of a renewed dose of ‘all talk and no action’ was once again masterful, above all in emphasizing the ECB’s dovishness and hefty easing bias.
However, the ECB hasn’t actually discussed extending QE today, Ostwald points out.However, the ECB hasn’t actually discussed extending QE today, Ostwald points out.
3.41pm BST15:413.41pm BST15:41
ABN Amro: More QE comingABN Amro: More QE coming
ECB president Mario Draghi gave a clear signal that additional monetary easing is likely in the coming months, says Nick Kounis of ABN Amro.ECB president Mario Draghi gave a clear signal that additional monetary easing is likely in the coming months, says Nick Kounis of ABN Amro.
Here’s his early take:Here’s his early take:
The ECB lowered its 2017 inflation forecast as well as now seeing downside risks to these forecasts. At 1.7%, the new medium term forecast is already arguably below its price stability goal, while developments since that forecast was made, suggest it could be downgraded further.The ECB lowered its 2017 inflation forecast as well as now seeing downside risks to these forecasts. At 1.7%, the new medium term forecast is already arguably below its price stability goal, while developments since that forecast was made, suggest it could be downgraded further.
We therefore now think that the ECB will like step up its QE programmes going forward. This will likely mean an increase in the monthly purchase amount as well as an expansion of the pool of eligible assets.We therefore now think that the ECB will like step up its QE programmes going forward. This will likely mean an increase in the monthly purchase amount as well as an expansion of the pool of eligible assets.
3.39pm BST15:393.39pm BST15:39
Wall Street has also welcomed Mario Draghi’s pledge to take more stimulus measure if needed.Wall Street has also welcomed Mario Draghi’s pledge to take more stimulus measure if needed.
The Dow Jones industrial average, and the broader S&P 500, are both up by almost 1%.The Dow Jones industrial average, and the broader S&P 500, are both up by almost 1%.
S&P rips higher... +21 handles #ThankYouDraghiS&P rips higher... +21 handles #ThankYouDraghi
3.23pm BST15:233.23pm BST15:23
Draghi's press conference: the key pointsDraghi's press conference: the key points
We won’t call it a vintage performance from Mario Draghi, as that might sound agist on his birthday.We won’t call it a vintage performance from Mario Draghi, as that might sound agist on his birthday.
But it was a timely reminder that the ECB president can move the markets like the best of them, as European shares rise and the euro takes a bath.But it was a timely reminder that the ECB president can move the markets like the best of them, as European shares rise and the euro takes a bath.
Here’s a quick summaryHere’s a quick summary
1) The ECB is gloomy, and getting gloomier.1) The ECB is gloomy, and getting gloomier.
As feared, the ECB has cut its forecasts for growth and inflation over the next few years, admitting that inflation will still be below target by 2017 (see details here)As feared, the ECB has cut its forecasts for growth and inflation over the next few years, admitting that inflation will still be below target by 2017 (see details here)
As Draghi put it:As Draghi put it:
Overall, we expect the economic recovery to continue, albeit at a somewhat weaker pace than earlier expected, reflecting in particular the slowdown in emerging market economies, which is weighing on global growth and foreign demand for euro area exportsOverall, we expect the economic recovery to continue, albeit at a somewhat weaker pace than earlier expected, reflecting in particular the slowdown in emerging market economies, which is weighing on global growth and foreign demand for euro area exports
But the big worry is that these forecasts don’t take into account the turmoil which gripped the markets in the last three weeks, rippling out from China.But the big worry is that these forecasts don’t take into account the turmoil which gripped the markets in the last three weeks, rippling out from China.
2) The ECB may be forced to extend its stimulus programme again.2) The ECB may be forced to extend its stimulus programme again.
In Draghi’s words:In Draghi’s words:
[the governing council] emphasises its willingness and ability to act, if warranted, by using all the instruments available within its mandate and, in particular, recalls that the asset purchase programme provides sufficient flexibility in terms of adjusting the size, composition and duration of the programme.[the governing council] emphasises its willingness and ability to act, if warranted, by using all the instruments available within its mandate and, in particular, recalls that the asset purchase programme provides sufficient flexibility in terms of adjusting the size, composition and duration of the programme.
That means it could buy more than €60bn of assets per month, or keep buying beyond the current cut-off target in a year’s time.That means it could buy more than €60bn of assets per month, or keep buying beyond the current cut-off target in a year’s time.
3) The markets smell more cheap money.3) The markets smell more cheap money.
Nearly seven years after the collapse of Lehman Brothers, the financial world is still driven by central banks. Europe’s stock markets are romping ahead, led by Germany’s DAX:Nearly seven years after the collapse of Lehman Brothers, the financial world is still driven by central banks. Europe’s stock markets are romping ahead, led by Germany’s DAX:
4) Draghi is worried about China’s slowdown.4) Draghi is worried about China’s slowdown.
China will be a key issue at the G20 meeting this weekend, with the ECB concerned that the slowdown in the country’s economy is going to cause serious problems.China will be a key issue at the G20 meeting this weekend, with the ECB concerned that the slowdown in the country’s economy is going to cause serious problems.
He said:He said:
We are observing a weakening of the prospects of the Chinese economy. This has two effects substantially: one is through the trade channel, weakening the economies of the rest of the world... and the confidence effect on the stock market and all the other financial markets, which is also operating on the negative side.We are observing a weakening of the prospects of the Chinese economy. This has two effects substantially: one is through the trade channel, weakening the economies of the rest of the world... and the confidence effect on the stock market and all the other financial markets, which is also operating on the negative side.
5) Greece must do its homework5) Greece must do its homework
The Greek debt crisis got less attention than usual, now that the bailout deal has been agreed. But Athens must do more to satisfy the ECB before it will agree to include Greek bonds in its QE programme:The Greek debt crisis got less attention than usual, now that the bailout deal has been agreed. But Athens must do more to satisfy the ECB before it will agree to include Greek bonds in its QE programme:
First, Greece must be in a program for financial assistance, it must comply with it, and must then show “strong ownership and consistent and significant implementation”.First, Greece must be in a program for financial assistance, it must comply with it, and must then show “strong ownership and consistent and significant implementation”.
There will be some milestones that will be judged and assessed in the weeks ahead and based on that assessment the Governing Council will take a decision.There will be some milestones that will be judged and assessed in the weeks ahead and based on that assessment the Governing Council will take a decision.
2.37pm BST14:372.37pm BST14:37
A slice of birthday cake for CNBC’s Carolin Roth, who wishes Draghi a happy birthday.A slice of birthday cake for CNBC’s Carolin Roth, who wishes Draghi a happy birthday.
Draghi press conference ends on 'happy birthday note' (just a wish not a song).Draghi press conference ends on 'happy birthday note' (just a wish not a song).
She also gets Draghi to talk about China -- he explains that the slowdown of the Chinese economy will have an impact on trade channels across the globe.She also gets Draghi to talk about China -- he explains that the slowdown of the Chinese economy will have an impact on trade channels across the globe.
He’ll be pushing Chinese officials for answers at the G20 meeting this weekend.He’ll be pushing Chinese officials for answers at the G20 meeting this weekend.
And that’s the end of the press conference. I’ll pull together a summary and some instant reaction now.And that’s the end of the press conference. I’ll pull together a summary and some instant reaction now.
2.30pm BST14:302.30pm BST14:30
Francesco Papadia, a former senior official at the ECB, puts Draghi’s last comments into context:Francesco Papadia, a former senior official at the ECB, puts Draghi’s last comments into context:
#Draghi indirectly criticises the current intergovermental approach to policy making in €-area and stresses the need of a federal approach.#Draghi indirectly criticises the current intergovermental approach to policy making in €-area and stresses the need of a federal approach.
2.29pm BST14:292.29pm BST14:29
Why are European countries struggle to achieve close integration?Why are European countries struggle to achieve close integration?
These countries fought for centuries, Draghi replies. But after the second world war, they all recognised that integration was fundamentally a political process designed to guarantee permanent peace in Europe.These countries fought for centuries, Draghi replies. But after the second world war, they all recognised that integration was fundamentally a political process designed to guarantee permanent peace in Europe.
The union isn’t perfect. More progress is needed towards fiscal integration, but each crisis pushes Europe closer (he cites the Five Presidents’ report, which proposed a common eurozone treasury)The union isn’t perfect. More progress is needed towards fiscal integration, but each crisis pushes Europe closer (he cites the Five Presidents’ report, which proposed a common eurozone treasury)
Draghi: Imperfection of our union is source of instabilitiesDraghi: Imperfection of our union is source of instabilities
Draghi mentions the warDraghi mentions the war
2.24pm BST14:242.24pm BST14:24
There was no discussion about expanding QE today, Draghi insists. No-one on the governing council wanted to do it.There was no discussion about expanding QE today, Draghi insists. No-one on the governing council wanted to do it.
2.23pm BST14:232.23pm BST14:23
We didn’t discuss whether interest rates have reached the ‘lower bound’, says Draghi.We didn’t discuss whether interest rates have reached the ‘lower bound’, says Draghi.
They are currently at record lows, of course, with eurozone banks already paying negative interest rates on their deposits at the ECB.They are currently at record lows, of course, with eurozone banks already paying negative interest rates on their deposits at the ECB.
#ECB's Draghi: Lower bound of interest rates not discussed. pic.twitter.com/zCkAABLomA#ECB's Draghi: Lower bound of interest rates not discussed. pic.twitter.com/zCkAABLomA
2.22pm BST14:222.22pm BST14:22
#Draghi is less comfortable with financial volatility now than he was in June: an incremental change.#Draghi is less comfortable with financial volatility now than he was in June: an incremental change.
2.21pm BST14:212.21pm BST14:21
Back to China. Draghi says the ECB “took note” of the devaluation of the yuan last month (I bet they did!).Back to China. Draghi says the ECB “took note” of the devaluation of the yuan last month (I bet they did!).
He expects to hear more details at the G20 meeting of central bankers and finance chiefs this weekend.He expects to hear more details at the G20 meeting of central bankers and finance chiefs this weekend.
2.20pm BST14:202.20pm BST14:20
Draghi: Tragic loss of life on Europe's doorstepDraghi: Tragic loss of life on Europe's doorstep
Can the ECB do anything to address the refugee crisis that is unfolding in Europe?Can the ECB do anything to address the refugee crisis that is unfolding in Europe?
Draghi replies that:Draghi replies that:
“Any European should be horrified by the tragic loss of life on our doorstep.“Any European should be horrified by the tragic loss of life on our doorstep.
The ECB simply doesn’t have any democratic mandate to act in this sphere so it’s a question for our elected leaders, but this certainly shouldn’t hamper our most heartfelt participation to what is happening.”The ECB simply doesn’t have any democratic mandate to act in this sphere so it’s a question for our elected leaders, but this certainly shouldn’t hamper our most heartfelt participation to what is happening.”
(updated with full quote)(updated with full quote)
Updated at 3.15pm BSTUpdated at 3.15pm BST
2.14pm BST14:142.14pm BST14:14
Is the worst of the market turbulence over, or does the ECB expect more volatility?Is the worst of the market turbulence over, or does the ECB expect more volatility?
Draghi says we must wait to see whether the last few weeks is short-term volatility, or permanent volatility. The latter would increase risk premia, and mean that today’s forecasts on growth and inflation may be too optimistic.Draghi says we must wait to see whether the last few weeks is short-term volatility, or permanent volatility. The latter would increase risk premia, and mean that today’s forecasts on growth and inflation may be too optimistic.
Right now, we don’t know for sure.Right now, we don’t know for sure.
Draghi: "Inflation expectations have been pretty volatile: they went down then went up". Could be EM, could be risk premium went up.Draghi: "Inflation expectations have been pretty volatile: they went down then went up". Could be EM, could be risk premium went up.
2.11pm BST14:112.11pm BST14:11
The ECB hasn’t discussed how it could expand its QE programme, says Mario Draghi. We’re not there yet.The ECB hasn’t discussed how it could expand its QE programme, says Mario Draghi. We’re not there yet.
2.09pm BST14:092.09pm BST14:09
The ECB has also cut the emergency support provided to Greece today, from €89.7bn to €89.1bn.The ECB has also cut the emergency support provided to Greece today, from €89.7bn to €89.1bn.
Don’t worry, though. That’s an encouraging sign, as it means there is more liquidity coming back into the banking sector.Don’t worry, though. That’s an encouraging sign, as it means there is more liquidity coming back into the banking sector.
Draghi thinks the ECB announced it before the press pack sniffed it out. Bloomberg begs to differ.....Draghi thinks the ECB announced it before the press pack sniffed it out. Bloomberg begs to differ.....
Draghi has a go at journos for failing to get ELA number for Greece - corrected by his PR, story broken before ECB's announcement...Draghi has a go at journos for failing to get ELA number for Greece - corrected by his PR, story broken before ECB's announcement...
The ECB just got scooped by Bloomberg. Bravo @nchrysoloras #ELAThe ECB just got scooped by Bloomberg. Bravo @nchrysoloras #ELA
2.06pm BST14:062.06pm BST14:06
Onto Greece.Onto Greece.
Draghi confirms that the ECB insisted that Greek bank depositors were protected from any haircuts on their savings.Draghi confirms that the ECB insisted that Greek bank depositors were protected from any haircuts on their savings.
Could the ECB reinstate the ‘waiver’ that allowed it to buy Greek bonds despite the low credit rating?Could the ECB reinstate the ‘waiver’ that allowed it to buy Greek bonds despite the low credit rating?
That can’t happen unless a country is in a bailout programme, and complying with it, Draghi replies. And there must be a debt-sustainability analysis.That can’t happen unless a country is in a bailout programme, and complying with it, Draghi replies. And there must be a debt-sustainability analysis.
That suggests Greece must wait for the first review of its third bailout (once it has got this month’s election out of the way)That suggests Greece must wait for the first review of its third bailout (once it has got this month’s election out of the way)
2.03pm BST14:032.03pm BST14:03
Is the ECB chasing the wrong inflation target (close to, but below 2%)?Is the ECB chasing the wrong inflation target (close to, but below 2%)?
Draghi says the governing council hasn’t discussed whether the target is still appropriate.Draghi says the governing council hasn’t discussed whether the target is still appropriate.
And on the strength of the euro, he says the exchange rate isn’t a policy target, but it is very important for price stability and growth.And on the strength of the euro, he says the exchange rate isn’t a policy target, but it is very important for price stability and growth.
That looks like a sabre-rattle in the direction of the Currency Wars - if so, it worked, as the euro keeps falling:That looks like a sabre-rattle in the direction of the Currency Wars - if so, it worked, as the euro keeps falling:
#Euro extends it's drop as #ECB's Draghi says exchange rate very important for GDP/inflation. pic.twitter.com/9gfEubmP37#Euro extends it's drop as #ECB's Draghi says exchange rate very important for GDP/inflation. pic.twitter.com/9gfEubmP37
He adds thatHe adds that
1.58pm BST13:581.58pm BST13:58
This press conference is much less cheerful than the one in mid-July.This press conference is much less cheerful than the one in mid-July.
Does anyone still remember the upbeat, own-shoulder-clapping #ECB press conference of just a couple of months ago?Does anyone still remember the upbeat, own-shoulder-clapping #ECB press conference of just a couple of months ago?
1.57pm BST13:571.57pm BST13:57
Mario Draghi then drops another big hint that the ECB could expand its bond-buying programme beyond September 2016.Mario Draghi then drops another big hint that the ECB could expand its bond-buying programme beyond September 2016.
Our new forecasts were drawn up on August 12, Draghi explains. That’s shortly before China’s Black Monday, which roiled stock markets worldwide.Our new forecasts were drawn up on August 12, Draghi explains. That’s shortly before China’s Black Monday, which roiled stock markets worldwide.
Thus, there are downside risks to the current forecasts, meaning growth could be even weaker and inflation even lower.Thus, there are downside risks to the current forecasts, meaning growth could be even weaker and inflation even lower.
1.54pm BST13:541.54pm BST13:54
European stock markets are surging, as traders anticipate further stimulus measures from the ECB:European stock markets are surging, as traders anticipate further stimulus measures from the ECB:
Over at the Frankfurt stock market, the German DAX has jumped by 217 points, or over 2%. A weaker euro is very good news for German exporters.Over at the Frankfurt stock market, the German DAX has jumped by 217 points, or over 2%. A weaker euro is very good news for German exporters.
European markets are RIPPING higher on Draghi comments: $DAX +2.3% $STOXX +1.9% $CAC +1.8% $FTSE +1.5% http://t.co/uVEWwnOMPfEuropean markets are RIPPING higher on Draghi comments: $DAX +2.3% $STOXX +1.9% $CAC +1.8% $FTSE +1.5% http://t.co/uVEWwnOMPf
1.50pm BST13:501.50pm BST13:50
Onto questions:Onto questions:
Q: What’s the downside risk to the ECB’s forecasts of 0.1% inflation rate this year? And what more can you do about it?Q: What’s the downside risk to the ECB’s forecasts of 0.1% inflation rate this year? And what more can you do about it?
Draghi replies that we could see negative inflation prints in the months ahead, but due to lower oil and commodity prices rather than full-blown deflation.Draghi replies that we could see negative inflation prints in the months ahead, but due to lower oil and commodity prices rather than full-blown deflation.
And the Governing Council is committed to doing everything in its power, he reiterates.And the Governing Council is committed to doing everything in its power, he reiterates.
#Draghi: "we may see negative numbers of inflation in the coming months" but mainly due to energy. Repeats #ECB's willingness to act.#Draghi: "we may see negative numbers of inflation in the coming months" but mainly due to energy. Repeats #ECB's willingness to act.
1.47pm BST13:471.47pm BST13:47
The euro has fallen by almost one cent against the US dollar during Mario Draghi’s statement.The euro has fallen by almost one cent against the US dollar during Mario Draghi’s statement.
#Draghi speaks, the #euro sinks.... pic.twitter.com/58KvcKadWz#Draghi speaks, the #euro sinks.... pic.twitter.com/58KvcKadWz
1.45pm BST13:451.45pm BST13:45
ECB cuts growth and inflation forecastsECB cuts growth and inflation forecasts
The ECB has lowered its forecasts for growth and inflation this year, and in 2016 and 2017.The ECB has lowered its forecasts for growth and inflation this year, and in 2016 and 2017.
That shows why Draghi is hinting at fresh stimulus measures:That shows why Draghi is hinting at fresh stimulus measures:
Here’s the details:Here’s the details:
Draghi: September macroeconomic projections foresee GDP increasing by 1.4% in 2015 [previous 1.5%], 1.7% in 2016 [1.9%], 1.8% in 2017 [2.0%]Draghi: September macroeconomic projections foresee GDP increasing by 1.4% in 2015 [previous 1.5%], 1.7% in 2016 [1.9%], 1.8% in 2017 [2.0%]
Draghi: September macroeconomic projections foresee HICP inflation at 0.1% in 2015 [previous 0.3%], 1.1% in 2016 [1.5%], 1.7% in 2017 [1.8%]Draghi: September macroeconomic projections foresee HICP inflation at 0.1% in 2015 [previous 0.3%], 1.1% in 2016 [1.5%], 1.7% in 2017 [1.8%]
Updated at 1.46pm BSTUpdated at 1.46pm BST
1.44pm BST13:441.44pm BST13:44
Draghi hints at further stimulusDraghi hints at further stimulus
Draghis also drops a clear hint that the ECB could expands its quantitative easing programme, given the new downside risks.Draghis also drops a clear hint that the ECB could expands its quantitative easing programme, given the new downside risks.
We will use all the tools in our mandate if needed, he insists.We will use all the tools in our mandate if needed, he insists.
He points out that the ECB’s asset purchase scheme is flexible, and the central bank could change the size, composition and duration of the programme. (it is currently buying €60bn of assets each month, and due to run until September 2016).He points out that the ECB’s asset purchase scheme is flexible, and the central bank could change the size, composition and duration of the programme. (it is currently buying €60bn of assets each month, and due to run until September 2016).
Draghi: Asset purchases are intended to run until the end of September 2016, or beyond, if necessaryDraghi: Asset purchases are intended to run until the end of September 2016, or beyond, if necessary
Updated at 2.16pm BSTUpdated at 2.16pm BST
1.41pm BST13:411.41pm BST13:41
Analysts say Draghi has just announced a small, but significant, tweak to the ECB’s QE programmeAnalysts say Draghi has just announced a small, but significant, tweak to the ECB’s QE programme
Share limited increased by #ECB's Draghi as downside risks appear to have pushed him to actShare limited increased by #ECB's Draghi as downside risks appear to have pushed him to act
Little QE tweak, but QE tweak it is #Draghi #ECBLittle QE tweak, but QE tweak it is #Draghi #ECB
1.41pm BST13:411.41pm BST13:41
Draghi warns of new downside risksDraghi warns of new downside risks
As expected, Draghi is sounding dovish.As expected, Draghi is sounding dovish.
He warns that ‘renewed downside risks” have emerged to the outlook for growth, and inflation, in recent weeks.He warns that ‘renewed downside risks” have emerged to the outlook for growth, and inflation, in recent weeks.
1.37pm BST13:371.37pm BST13:37
ECB adjusts asset purchase schemeECB adjusts asset purchase scheme
Draghi is reading his prepared statement. He confirms that the ECB left interest rates unchanged.Draghi is reading his prepared statement. He confirms that the ECB left interest rates unchanged.
Our asset purchase scheme (QE) continues to proceed smoothly, he continues.Our asset purchase scheme (QE) continues to proceed smoothly, he continues.
And then he drops a surprise! The EC has decided to increase the share limit on its public sector purchase programme, from 25% to 33%.And then he drops a surprise! The EC has decided to increase the share limit on its public sector purchase programme, from 25% to 33%.
That means the ECB could buy more of a single asset, addressing fears that it might run out of bonds to buy.That means the ECB could buy more of a single asset, addressing fears that it might run out of bonds to buy.
Draghi: We decided to increase issue share limit in public sector purchase programme from 25% to 33%.Draghi: We decided to increase issue share limit in public sector purchase programme from 25% to 33%.
Updated at 4.01pm BSTUpdated at 4.01pm BST
1.32pm BST13:321.32pm BST13:32
ECB press conference beginsECB press conference begins
Here we go. Mario Draghi is entering the room, fashionably late as usual.Here we go. Mario Draghi is entering the room, fashionably late as usual.
No sign of birthday cake crumbs on his suit, but he may be sporting a birthday haircut.No sign of birthday cake crumbs on his suit, but he may be sporting a birthday haircut.
1.22pm BST13:221.22pm BST13:22
Mario Draghi’s press conference is being streamed live, here:Mario Draghi’s press conference is being streamed live, here:
1.18pm BST13:181.18pm BST13:18
15 minutes to go until the Draghi show. Time for another coffee!15 minutes to go until the Draghi show. Time for another coffee!
1.17pm BST13:171.17pm BST13:17
Mario Draghi is a tricky man to predict, so traders who expect strong hints about more stimulus measures could be disappointed.Mario Draghi is a tricky man to predict, so traders who expect strong hints about more stimulus measures could be disappointed.
Brenda Kelly of London Capital Markets reckons Draghi will probably “keep his powder dry” until we get more clarity about the global economy, and learn whether the US raises interest rates this month.Brenda Kelly of London Capital Markets reckons Draghi will probably “keep his powder dry” until we get more clarity about the global economy, and learn whether the US raises interest rates this month.
She warns:She warns:
President Draghi’s dovishness could fall short of market expectations and surprise the looming ECB doves by pushing the euro higher against the US dollar and pound.President Draghi’s dovishness could fall short of market expectations and surprise the looming ECB doves by pushing the euro higher against the US dollar and pound.
1.08pm BST13:081.08pm BST13:08
Here’s the official announcement:Here’s the official announcement:
Monetary policy decisions: rates unchanged http://t.co/la0bFRvY8cMonetary policy decisions: rates unchanged http://t.co/la0bFRvY8c
12.51pm BST12:5112.51pm BST12:51
Happy birthday Mario!Happy birthday Mario!
What better way to mark your 68th birthday than a press conference in Frankfurt?What better way to mark your 68th birthday than a press conference in Frankfurt?
Today is Mario #Draghi's birthday, he's turning 68. But please, no #confettis... :)Today is Mario #Draghi's birthday, he's turning 68. But please, no #confettis... :)
Draghi has certainly seen enough confetti this year already, following April’s antics.Draghi has certainly seen enough confetti this year already, following April’s antics.
Remarkable scenes at today's ECB press conference: http://t.co/XB6i3QSCd4 pic.twitter.com/sCy08at1bqRemarkable scenes at today's ECB press conference: http://t.co/XB6i3QSCd4 pic.twitter.com/sCy08at1bq
12.46pm BST12:4612.46pm BST12:46
ECB leaves interest rates unchangedECB leaves interest rates unchanged
To no-one’s surprise, the European Central Bank has voted to leave interest rates unchanged.To no-one’s surprise, the European Central Bank has voted to leave interest rates unchanged.
That means:That means:
Next up, the press conference in 45 minutes.Next up, the press conference in 45 minutes.
12.40pm BST12:4012.40pm BST12:40
ECB meeting: What to expect from Mario Draghi todayECB meeting: What to expect from Mario Draghi today
Right, it’s time to turn our attention to European Central Bank day.Right, it’s time to turn our attention to European Central Bank day.
Here’s what economists and investors are looking out for from Mario Draghi at this afternoon’s press conference:Here’s what economists and investors are looking out for from Mario Draghi at this afternoon’s press conference:
1) Lower forecasts. With the oil price still weak, and emerging market growth slowing, it’s hard to see how the ECB can avoid revising down its forecasts for inflation in 2015 and 2016. We get new growth forecasts too.1) Lower forecasts. With the oil price still weak, and emerging market growth slowing, it’s hard to see how the ECB can avoid revising down its forecasts for inflation in 2015 and 2016. We get new growth forecasts too.
2) More QE? If inflation is weak, shouldn’t the ECB respond with a renewed burst of quantitative easing? Investors expect a hint today, so the markets could be volatile if Draghi disappoints.2) More QE? If inflation is weak, shouldn’t the ECB respond with a renewed burst of quantitative easing? Investors expect a hint today, so the markets could be volatile if Draghi disappoints.
3) China. How much damage could the Chinese slowdown cause to the eurozone recovery, and what might the ECB do about it?3) China. How much damage could the Chinese slowdown cause to the eurozone recovery, and what might the ECB do about it?
4) Financial volatility. European stock markets have fallen by around 12% since the ECB’s last meeting in mid-July. Should we expect more turbulence, and might this affect policymaking in Frankfurt?4) Financial volatility. European stock markets have fallen by around 12% since the ECB’s last meeting in mid-July. Should we expect more turbulence, and might this affect policymaking in Frankfurt?
5) Greece. Draghi could talk about capital controls, and the possibility of including Greece in the ECB’s QE programme.5) Greece. Draghi could talk about capital controls, and the possibility of including Greece in the ECB’s QE programme.
He may also get quizzed about this month’s general election, as former prime minister Alexis Tsipras continues to lose ground in the polls. Could the bailout deal be heading off the rails?He may also get quizzed about this month’s general election, as former prime minister Alexis Tsipras continues to lose ground in the polls. Could the bailout deal be heading off the rails?
New Democracy draws level with Syriza in poll for Mega TV http://t.co/OFNDOIRdvR #Greece pic.twitter.com/EOjlOwRrYeNew Democracy draws level with Syriza in poll for Mega TV http://t.co/OFNDOIRdvR #Greece pic.twitter.com/EOjlOwRrYe
Updated at 12.52pm BSTUpdated at 12.52pm BST
12.22pm BST12:2212.22pm BST12:22
Summary: Markets recover some lossesSummary: Markets recover some losses
Time for a recap, before the ECB’s decision on monetary policy (12.45pm BST) followed by its press conference (1.30pm BST).Time for a recap, before the ECB’s decision on monetary policy (12.45pm BST) followed by its press conference (1.30pm BST).
World stock markets have bounced back from their recent losses, as investors anticipate fresh hints that the European Central Bank could expand its stimulus measures.World stock markets have bounced back from their recent losses, as investors anticipate fresh hints that the European Central Bank could expand its stimulus measures.
At noon, the FTSE 100 index had jumped 1.4%, with healthy rises on all the main indices.At noon, the FTSE 100 index had jumped 1.4%, with healthy rises on all the main indices.
Earlier, Asia’s stock markets also rallied, after several days of losses.Earlier, Asia’s stock markets also rallied, after several days of losses.
Investors were given a day off from worrying about China (the Shanghai market was shut), and could admire the huge array of military might which marched, drove and soared through Beijing instead.Investors were given a day off from worrying about China (the Shanghai market was shut), and could admire the huge array of military might which marched, drove and soared through Beijing instead.
Mike van Dulken, Head of Research at Accendo Markets, sums up the mood:Mike van Dulken, Head of Research at Accendo Markets, sums up the mood:
“Major equity markets climbed this morning thanks to a late rally in the US (in spite of mixed data) as well as a largely positive session in Asia overnight.“Major equity markets climbed this morning thanks to a late rally in the US (in spite of mixed data) as well as a largely positive session in Asia overnight.
A two-day Chinese holiday is providing welcome regional respite from volatility linked to growth-concerns in the world’s number 2 economy and of course its global knock-on effect.A two-day Chinese holiday is providing welcome regional respite from volatility linked to growth-concerns in the world’s number 2 economy and of course its global knock-on effect.
There was encouraging news for the eurozone, with companies reporting the fastest pick-up in growth in four years. Spain shone, but France lagged behind.There was encouraging news for the eurozone, with companies reporting the fastest pick-up in growth in four years. Spain shone, but France lagged behind.
Related: Receding Greek crisis helps boost eurozone growthRelated: Receding Greek crisis helps boost eurozone growth
Growth in the UK service sector growth has slowed a little, though:Growth in the UK service sector growth has slowed a little, though:
Related: UK service sector growth slows in AugustRelated: UK service sector growth slows in August
US Treasury secretary Jack Lew has warned Beijing not to mess too much with the value of the yuan.US Treasury secretary Jack Lew has warned Beijing not to mess too much with the value of the yuan.
Updated at 12.23pm BSTUpdated at 12.23pm BST
11.40am BST11:4011.40am BST11:40
US Treasury secretary: We'll hold China accountableUS Treasury secretary: We'll hold China accountable
America has long been concerned that China has been keeping the yuan unfairly low, even before last month’s surprise devaluations.America has long been concerned that China has been keeping the yuan unfairly low, even before last month’s surprise devaluations.
Treasury secretary Jack Lew has now fired a warning at Beijing to play fairly and let the yuan float more freely.Treasury secretary Jack Lew has now fired a warning at Beijing to play fairly and let the yuan float more freely.
Speaking to CNBC, Lew said:Speaking to CNBC, Lew said:
“They have to understand, and I make this point to them quite clearly, that there’s an economic and a political reality to things like exchange rates.“They have to understand, and I make this point to them quite clearly, that there’s an economic and a political reality to things like exchange rates.
They need to understand that they signal their intentions by the actions they take and the way they announce them. And they have to be very clear that they’re continuing to move in a positive direction. We’re going to hold them accountable.”They need to understand that they signal their intentions by the actions they take and the way they announce them. And they have to be very clear that they’re continuing to move in a positive direction. We’re going to hold them accountable.”
Something for Beijing policymakers to ponder, now their military shindig is over.Something for Beijing policymakers to ponder, now their military shindig is over.
10.51am BST10:5110.51am BST10:51
Wall Street is expected to join the rally in a few hours time:Wall Street is expected to join the rally in a few hours time:
US equity market calls (via CMC Markets)US equity market calls (via CMC Markets)
10.19am BST10:1910.19am BST10:19
The Economist Intelligence Unit predicts that Mario Draghi will hint at further moves to ease monetary policy at this afternoon’s press conference.The Economist Intelligence Unit predicts that Mario Draghi will hint at further moves to ease monetary policy at this afternoon’s press conference.
They reckon the ECB’s bond-buying programme, due to end in September 2016, could be extended by almost another year. By then, though, European politicians must have implemented serious reforms.They reckon the ECB’s bond-buying programme, due to end in September 2016, could be extended by almost another year. By then, though, European politicians must have implemented serious reforms.
(1/4) Draghi's first presser today since investors' China wobble. No policy moves expected, but the tone will be dovish.(1/4) Draghi's first presser today since investors' China wobble. No policy moves expected, but the tone will be dovish.
(2/4) Our view. First, the ECB's programme of QE will run until mid-2017.(2/4) Our view. First, the ECB's programme of QE will run until mid-2017.
(3/4) Second, after taper and a pause, first ECB interest rate hike in Q2 2018.(3/4) Second, after taper and a pause, first ECB interest rate hike in Q2 2018.
(4/4) Third, euro zone in trouble if by that time monetary policy isn't firmly secondary to moves towards fundamental reform of the bloc.(4/4) Third, euro zone in trouble if by that time monetary policy isn't firmly secondary to moves towards fundamental reform of the bloc.
9.56am BST09:569.56am BST09:56
Despite today’s rally, European markets are still sharply lower than one month ago - before fears over the global economy rattled investors.Despite today’s rally, European markets are still sharply lower than one month ago - before fears over the global economy rattled investors.
9.38am BST09:389.38am BST09:38
While Europe picks up pace, Britain’s service sector growth has slowed to its slowest rate in 27 months.While Europe picks up pace, Britain’s service sector growth has slowed to its slowest rate in 27 months.
The UK services PMI dipped to 55.6 in August, from 57.4, suggesting the recovery weakened last month.The UK services PMI dipped to 55.6 in August, from 57.4, suggesting the recovery weakened last month.
That’s still shows quite solid expansion. But with manufacturing growth also slowing in August, Markit predicts overall growth of just 0.5% this quarter, down from 0.7% in April-June.That’s still shows quite solid expansion. But with manufacturing growth also slowing in August, Markit predicts overall growth of just 0.5% this quarter, down from 0.7% in April-June.
UK PMI Services: 27-month low. Slowest rise in new business since Apr 2013. Input price inflation eases for 3rd straight monthUK PMI Services: 27-month low. Slowest rise in new business since Apr 2013. Input price inflation eases for 3rd straight month
9.29am BST09:299.29am BST09:29
European markets push higher after PMI reportsEuropean markets push higher after PMI reports
European investors are cheering the surge in eurozone private sector growth last month.European investors are cheering the surge in eurozone private sector growth last month.
The FTSE 100 is now up by 103 points, or 1.7%, while Germany’s DAX is 1.8% higher.The FTSE 100 is now up by 103 points, or 1.7%, while Germany’s DAX is 1.8% higher.
Today’s PMI reports are helping to ease concerns over Europe’s economy, as Howard Archer of IHS Global Insight explains:Today’s PMI reports are helping to ease concerns over Europe’s economy, as Howard Archer of IHS Global Insight explains:
IHS believes that the Eurozone should be able to achieve reasonable, if unspectacular growth over the coming months – although the threat to global growth that could come from a marked Chinese slowdown clearly poses a downside risk.IHS believes that the Eurozone should be able to achieve reasonable, if unspectacular growth over the coming months – although the threat to global growth that could come from a marked Chinese slowdown clearly poses a downside risk.
9.19am BST09:199.19am BST09:19
The increase in eurozone private sector growth means even less chance that the ECB will announce new stimulus measures today.The increase in eurozone private sector growth means even less chance that the ECB will announce new stimulus measures today.
So argues Bloomberg economist Maxime Sbaihi, who predicts plenty of questions about China at this afternoon’s press conference:So argues Bloomberg economist Maxime Sbaihi, who predicts plenty of questions about China at this afternoon’s press conference:
CHART: Euro-area #PMI at new 4y high in August. No summer break for the recovery -> No #ECB policy change today. pic.twitter.com/HHHbvvlw6UCHART: Euro-area #PMI at new 4y high in August. No summer break for the recovery -> No #ECB policy change today. pic.twitter.com/HHHbvvlw6U
It's #ECB day again and a different (external) world than last meeting (July 16). #Draghi will have more questions on China than #Greece...It's #ECB day again and a different (external) world than last meeting (July 16). #Draghi will have more questions on China than #Greece...
9.11am BST09:119.11am BST09:11
Eurozone private sector growth hits four-year highEurozone private sector growth hits four-year high
Despite the slowdown in France, the eurozone’s private sector is growing at its fastest rate in four years.Despite the slowdown in France, the eurozone’s private sector is growing at its fastest rate in four years.
Data firm Markit just released its Eurozone composite PMI, and it shows that output expanded more quickly in August.Data firm Markit just released its Eurozone composite PMI, and it shows that output expanded more quickly in August.
The easing of the Greek debt crisis appears to have boosted confidence, encouraging companies to hire extra staff to handle a rise in business.The easing of the Greek debt crisis appears to have boosted confidence, encouraging companies to hire extra staff to handle a rise in business.
Markit’s Final Eurozone Services Business Activity Index rose to 54.4, up from July 54.0.Markit’s Final Eurozone Services Business Activity Index rose to 54.4, up from July 54.0.
And if you include the latest manufacturing data, the final Eurozone Composite Output Index rose to 54.3, up from July’s 53.9.And if you include the latest manufacturing data, the final Eurozone Composite Output Index rose to 54.3, up from July’s 53.9.
Chris Williamson of Markit says Spain’s performance was particularly impressive, while France appears to be stalling again:Chris Williamson of Markit says Spain’s performance was particularly impressive, while France appears to be stalling again:
“Although global economic worries have intensified in recent weeks, the calming of Grexit fears has led to an improvement in the business environment across the eurozone, pushing the pace of economic growth to its fastest for just over four years in August. The PMI is indicating euro area GDP growth close to 0.4% in the third quarter, a solid albeit unspectacular rate of expansion.“Although global economic worries have intensified in recent weeks, the calming of Grexit fears has led to an improvement in the business environment across the eurozone, pushing the pace of economic growth to its fastest for just over four years in August. The PMI is indicating euro area GDP growth close to 0.4% in the third quarter, a solid albeit unspectacular rate of expansion.
“The upturn was stronger than recorded by the flash reading, thanks mainly to stronger growth in Germany and the best performance for over four years in Italy, where the PMIs are both pointing to 0.5% GDP growth in the third quarter. But it is Spain that remains the star performer among the largest eurozone countries, with the PMI signalling another 1.0% GDP growth spurt in the third quarter.“The upturn was stronger than recorded by the flash reading, thanks mainly to stronger growth in Germany and the best performance for over four years in Italy, where the PMIs are both pointing to 0.5% GDP growth in the third quarter. But it is Spain that remains the star performer among the largest eurozone countries, with the PMI signalling another 1.0% GDP growth spurt in the third quarter.
“The worrying deterioration of growth in France is a major concern, the PMI dropping below the flash reading to signal a near-stagnation of the economy in the third quarter, but the ECB will be reassured by the ability of the eurozone economy as a whole to withstand recent headwinds.“The worrying deterioration of growth in France is a major concern, the PMI dropping below the flash reading to signal a near-stagnation of the economy in the third quarter, but the ECB will be reassured by the ability of the eurozone economy as a whole to withstand recent headwinds.
In summary, Spain, Italy and Germany all beat expectations for Services PMI's. France slips back #euroIn summary, Spain, Italy and Germany all beat expectations for Services PMI's. France slips back #euro
8.59am BST08:598.59am BST08:59
Not for the first time (or the last, I fear), Germany’s economy has outperformed France.Not for the first time (or the last, I fear), Germany’s economy has outperformed France.
The German service sector PMI rose to 54.9 last month, from 53.8 in July, indicating faster growth.The German service sector PMI rose to 54.9 last month, from 53.8 in July, indicating faster growth.
Companies reported an increase in output and new business, meaning they could hire more staff and even raise prices. That last point will please the ECB as it wonders if inflation can pick up.Companies reported an increase in output and new business, meaning they could hire more staff and even raise prices. That last point will please the ECB as it wonders if inflation can pick up.
8.55am BST08:558.55am BST08:55
Less encouragingly, France’s service sector came off the boil last month and only reported modest growth:Less encouragingly, France’s service sector came off the boil last month and only reported modest growth:
France Services PMI (Aug) falls back to 50.6, down from 51.8France Services PMI (Aug) falls back to 50.6, down from 51.8
8.52am BST08:528.52am BST08:52
Now this is encouraging -- Italy’s service sector just grew at the fastest pace since the early days of the financial crisis.Now this is encouraging -- Italy’s service sector just grew at the fastest pace since the early days of the financial crisis.
The Italian Services PMI, which tracks activity across the sector, jumped to 54.6 in August, from 52.0 in July.The Italian Services PMI, which tracks activity across the sector, jumped to 54.6 in August, from 52.0 in July.
Markit reports that:Markit reports that:
However, business expectations weakened to their lowest level this year.However, business expectations weakened to their lowest level this year.
Service sector activity growth in #Italy fastest in almost five-and-a-half years in August. Headline index at 54.6 http://t.co/yuYYk2FmaUService sector activity growth in #Italy fastest in almost five-and-a-half years in August. Headline index at 54.6 http://t.co/yuYYk2FmaU
Updated at 8.53am BSTUpdated at 8.53am BST
8.42am BST08:428.42am BST08:42
Sweden's Riksbank hints at further stimulusSweden's Riksbank hints at further stimulus
Sweden’s central bank has resisted the temptation to cut borrowing costs to fresh record lows.Sweden’s central bank has resisted the temptation to cut borrowing costs to fresh record lows.
The Riksbank left benchmark interest rates unchanged at minus 0.35%, but did hint that it could do more, saying:The Riksbank left benchmark interest rates unchanged at minus 0.35%, but did hint that it could do more, saying:
“The Riksbank remains highly prepared to make monetary policy even more expansionary in the event of inflation prospects deteriorating.”“The Riksbank remains highly prepared to make monetary policy even more expansionary in the event of inflation prospects deteriorating.”
#Swedish Central Bank leaves rate unchanged,but cuts inflation outlook& says room more QE...almost exactly what expected from @ecb later#Swedish Central Bank leaves rate unchanged,but cuts inflation outlook& says room more QE...almost exactly what expected from @ecb later
8.40am BST08:408.40am BST08:40
Budget airline easyJet is leading the FTSE 100 risers in London.Budget airline easyJet is leading the FTSE 100 risers in London.
Shares surged by almost 7%, after raising its profit forecasts and reporting record traffic levels in August.Shares surged by almost 7%, after raising its profit forecasts and reporting record traffic levels in August.
Updated at 8.40am BSTUpdated at 8.40am BST
8.36am BST08:368.36am BST08:36
European shares rallyEuropean shares rally
Up we go again! European stock markets have jumped at the start of trading, as investors pile into shares ahead of the ECB meeting.Up we go again! European stock markets have jumped at the start of trading, as investors pile into shares ahead of the ECB meeting.
The FTSE 100 leapt by 86 points, or nearly 1.5%, with traders anticipating that Mario Draghi may suggest new stimulus moves at this afternoon’s press conference in Frankfurt.The FTSE 100 leapt by 86 points, or nearly 1.5%, with traders anticipating that Mario Draghi may suggest new stimulus moves at this afternoon’s press conference in Frankfurt.
The absence of any dramatic swings in China may have helped the mood too, helping the City has shrugged off its recent angst over the global economy.The absence of any dramatic swings in China may have helped the mood too, helping the City has shrugged off its recent angst over the global economy.
8.31am BST08:318.31am BST08:31
Spain’s services companies have posted another month of solid growth, as its economy continues to recover.Spain’s services companies have posted another month of solid growth, as its economy continues to recover.
The Spanish Services PMI came in at 59.6 in August, down very slightly on July’s 59.7 but still a strong result (any reading over 50 shows growth). Measures of new business and job creation remained robust too.The Spanish Services PMI came in at 59.6 in August, down very slightly on July’s 59.7 but still a strong result (any reading over 50 shows growth). Measures of new business and job creation remained robust too.
8.20am BST08:208.20am BST08:20
Overnight, the International Monetary Fund has warned that the downside risks to global growth have risen, partly due to the slowdown in China.Overnight, the International Monetary Fund has warned that the downside risks to global growth have risen, partly due to the slowdown in China.
In a new report, ahead of the G20 finance ministers meeting in Ankara this weekend, the Fund said:In a new report, ahead of the G20 finance ministers meeting in Ankara this weekend, the Fund said:
Near-term downside risks for emerging economies have increased, given the combination of China’s growth transition, lower commodity prices, potential adverse corporate balance sheet and funding challenges related to a dollar appreciation, and capital flow reversals and disruptive asset price shifts.Near-term downside risks for emerging economies have increased, given the combination of China’s growth transition, lower commodity prices, potential adverse corporate balance sheet and funding challenges related to a dollar appreciation, and capital flow reversals and disruptive asset price shifts.
Risks to growth include financial market volatility, declining commodity prices & depreciating EMs currencies. #G20 http://t.co/sHBUAx62c0Risks to growth include financial market volatility, declining commodity prices & depreciating EMs currencies. #G20 http://t.co/sHBUAx62c0
The IMF also warned that global interest rates may have to stay low for even longer -- a signal to the Federal Reserve not to hike borrowing costs this month?The IMF also warned that global interest rates may have to stay low for even longer -- a signal to the Federal Reserve not to hike borrowing costs this month?
Related: IMF: China slowdown could keep global interest rates lowRelated: IMF: China slowdown could keep global interest rates low
8.13am BST08:138.13am BST08:13
Most mornings recently, we’ve been glued to the twists and turns on the Chinese stock market. Not today, though.Most mornings recently, we’ve been glued to the twists and turns on the Chinese stock market. Not today, though.
The Shanghai index is closed until Monday, so Beijing could hold a parade to mark its victory over Japan and the end of the second world war. And what an event it was, with masses of tanks, planes and troops on display.The Shanghai index is closed until Monday, so Beijing could hold a parade to mark its victory over Japan and the end of the second world war. And what an event it was, with masses of tanks, planes and troops on display.
Russia’s Vladimir Putin was there too; Britain, curiously, was represented by Ken Clarke MP, the long-serving former minister.Russia’s Vladimir Putin was there too; Britain, curiously, was represented by Ken Clarke MP, the long-serving former minister.
For the Brits Ken Clarke has turned up. Didn't seem overly keen to have the official photo. pic.twitter.com/nyum4nUE1nFor the Brits Ken Clarke has turned up. Didn't seem overly keen to have the official photo. pic.twitter.com/nyum4nUE1n
My colleague Claire Phipps live-blogged the whole thing:My colleague Claire Phipps live-blogged the whole thing:
Related: China military parade commemorates second world war victory – as it happenedRelated: China military parade commemorates second world war victory – as it happened
And Tom Phillips tweeted from Tiananmen Square:And Tom Phillips tweeted from Tiananmen Square:
Xi, Putin aaaand Jiang Zemin out on balcony. Big gasp for last guy pic.twitter.com/V6Pcau9d8DXi, Putin aaaand Jiang Zemin out on balcony. Big gasp for last guy pic.twitter.com/V6Pcau9d8D
If you think you're melting imagine these guys... pic.twitter.com/33uUpcCkE1If you think you're melting imagine these guys... pic.twitter.com/33uUpcCkE1
Tanks rolling into Tiananmen pic.twitter.com/IokDotmPXxTanks rolling into Tiananmen pic.twitter.com/IokDotmPXx
Updated at 8.16am BSTUpdated at 8.16am BST
7.54am BST07:547.54am BST07:54
After some tough days, Asia’s markets are staging a modest recovery today.After some tough days, Asia’s markets are staging a modest recovery today.
Japan’s Nikkei jumped by 0.7%, following three days of losses, and there are also gains in South Korea and India.Japan’s Nikkei jumped by 0.7%, following three days of losses, and there are also gains in South Korea and India.
But there are still concerns over how the region will fare, given the turbulence in China.But there are still concerns over how the region will fare, given the turbulence in China.
Angus Nicholson of IG reports “growing concern” about the Japanese banking sector, which may have made some reckless loans.Angus Nicholson of IG reports “growing concern” about the Japanese banking sector, which may have made some reckless loans.
In the face of poor growth prospects in Japan, banks aggressively began lending to emerging Asian nations. With the massive falls seen in emerging market currencies over the past twelve months or so, defaults on these loans have been soaring. This is likely to be a major headwind to the performance of the Nikkei over the coming months as well.In the face of poor growth prospects in Japan, banks aggressively began lending to emerging Asian nations. With the massive falls seen in emerging market currencies over the past twelve months or so, defaults on these loans have been soaring. This is likely to be a major headwind to the performance of the Nikkei over the coming months as well.
Updated at 7.55am BSTUpdated at 7.55am BST
7.36am BST07:367.36am BST07:36
Introduction: ECB may cut forecasts todayIntroduction: ECB may cut forecasts today
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s European Central Bank day. President Mario Draghi and the governing council are gathering in Frankfurt to set monetary policy, and discuss the state of Europe’s economy.It’s European Central Bank day. President Mario Draghi and the governing council are gathering in Frankfurt to set monetary policy, and discuss the state of Europe’s economy.
Economists believe the central bank could downgrade its inflation forecast, with price pressures stubbornly low and growth still somewhat sluggish.Economists believe the central bank could downgrade its inflation forecast, with price pressures stubbornly low and growth still somewhat sluggish.
Draghi may also hint that the ECB could launch future stimulus measures, if inflation doesn’t pick up soon. It’s currently just 0.2%, compared to a target of just below 2%.Draghi may also hint that the ECB could launch future stimulus measures, if inflation doesn’t pick up soon. It’s currently just 0.2%, compared to a target of just below 2%.
And he’ll also field a few questions about Greece, where the banking sector is still gripped by capital controls.And he’ll also field a few questions about Greece, where the banking sector is still gripped by capital controls.
Draghi is quite capable of talking the euro down if he fancies it, and the prospect of a dovish performance from the ECB chief will push shares higher this morning:Draghi is quite capable of talking the euro down if he fancies it, and the prospect of a dovish performance from the ECB chief will push shares higher this morning:
Ian Williams of stockbroker Peel Hunt says:Ian Williams of stockbroker Peel Hunt says:
Investors will be looking to ECB President Draghi for more supportive comments later today.Investors will be looking to ECB President Draghi for more supportive comments later today.
Our European opening calls: $FTSE 6130 up 47 $DAX 10134 up 86 $CAC 4590 up 35 $IBEX 10027 up 89 $MIB 21765 up 153Our European opening calls: $FTSE 6130 up 47 $DAX 10134 up 86 $CAC 4590 up 35 $IBEX 10027 up 89 $MIB 21765 up 153
Today’s agenda:Today’s agenda:
Sweden’s central bank is also meeting today. It could potentially cut interest rates deeper into negative territory to spur inflation.Sweden’s central bank is also meeting today. It could potentially cut interest rates deeper into negative territory to spur inflation.
New PMI surveys of the world’s service sector are released today, which will show if growth eased in August.New PMI surveys of the world’s service sector are released today, which will show if growth eased in August.
We also find out how many Americans claimed unemployment benefit last week, ahead of tomorrow’s eagerly awaited Non-Farm Payroll report.We also find out how many Americans claimed unemployment benefit last week, ahead of tomorrow’s eagerly awaited Non-Farm Payroll report.
I’ll be tracking all the main events though the day.I’ll be tracking all the main events though the day.
Updated at 7.55am BSTUpdated at 7.55am BST