“There was an air of anxiousness to the markets this Thursday, and not without good reason,” said Connor Campbell, financial analyst at Spreadex.
“For Christine Lagarde and the gang, increased optimism of an economic recovery in the Eurozone –to be backed up by a new set of forecasts this afternoon – and a region-wide inflation reading that is now beyond the 2% target are the main points of focus,” Campbell added.
That could cause the ECB to begin talks over tapering its €1.85trn bond-buying programme.
“It’s likely that it will be subtle stuff. No policy change announcement, but the removal of certain key phrases in relation to the bank’s bond-buying intentions going forwards. After all, with the Delta variant a threat, the Eurozone is far from out of the covid-woods yet, and the ECB will want to signal to investors that it is still committed to doing what is necessary to support the region,” said Campbell.
“As for the States, this afternoon’s CPI readings could be slightly more market-friendly. Both the standard and core figures are forecast to shrink month-on-month; the former from 0.8% to 0.4%, the latter from 0.9% to 0.5%. It is worth noting, however, that the same was expected last month, and instead we got a pair of recent highs.”
In addition to the inflation numbers is the latest weekly jobless claims reading, which is set to drop to a fresh pandemic-low of 370,000.
Ahead of all the oncoming news, markets were a mixed bag. Sterling’s continued losses against the dollar and the euro allowed the FTSE 100 to clim above the 7,100 mark, while the DAX and CAC fell 0.4% and 0.2% respectively. “The Dow Jones is set to be somewhere in between, currently heading for a 0.1% increase, though that is almost certain to change once the inflation data is out,” said Campbell.
FTSE 100 Top Movers
AutoTrader (6.2%), BT Group (2.91%) and Smith and Nephew (1.78%) are the biggest risers on the FTSE 100 during the morning session on Thursday.
While at the other end, Thungela Resources (-2.06%), Sainsbury (-1.98%) and Just Eat (-1.75%), have seen the biggest falls.