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Draghi shifts institutional 2016 outlook

European markets are enjoying a bumper start to the day despite the release of disappointing PMI data across Europe.

Mario Draghi
Source: Bloomberg

Yesterday’s speech from Mario Draghi shifted the focus onto the European Central Bank’s March meeting, but in doing so he has given intuitions all the reason they need to redraw their expectations for 2016.

Investment banks' consensus now looks to be pointing towards March, rather than June, as the likely date for increased firepower in the current ECB monetary policy programme. The speculation of what this might actually involve is less clear, with some even calling for an extra €10 billion on the monthly spend.

It is of course worth considering the change in voting members coming in June, and the next tranche are perceived as being more dovish which would make pushing through changes that much easier later in the year.

Europe wouldn’t be Europe without at least a few dissenting voices, and in a role he is only too familiar with Wolfgang Schauble has poured cold water on the bulls, stating he sees crisis-like developments in the global economy.

Once again, the oil producers and mining companies are leading the FTSE higher as equity markets enjoy a healthy bounce. Equity markets no longer appear to be following the ‘buy the dip’ template, but are of late more inclined to ‘sell the bounce’, yet given the size of this recent move higher, both the bulls and bears will be looking for any change in sentiment.

Oil traders continue to pay close attention to Chinese president Xi’s road trip as he has now moved from Saudi Arabia onto Iran, especially as it is the world’s largest consumer of oil.

In among the commodity companies on the rise is Sports Direct. This morning’s statement from Mike Ashley that he is not looking to take the company into private ownership has, as yet, failed to quash the share price excitement. 

Ahead of the open, we expect the Dow Jones to start 214 points higher, at 16,096.

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