Chinese stock market suffers biggest fall since 2008 – as it …
The new European Central Bank headquarters in Frankfurt.Photograph: BORIS ROESSLER/EPA
Good morning, and welcome to our rolling coverage of the financial markets, the world economy, business and finance.
It’s the start of a busy week. Investors are poised for Thursday’s European Central Bank meeting, where Mario Draghi might finally announce a sovereign bond-buying programme.
Anticipation of a big QE package has driven government bond yields to record highs, even though it’s not a done deal yet.
The ECB could yet announce a programme that’s too small to stimulate inflation, leaving the markets disappointed.
There’s also a theory that it will force national central banks across the eurozone to stand behind their own sovereign bonds, to address German concerns that QE could expose taxpayers to huge losses.
As Ian Williams of Peel Hunt explains:
The moment of truth arrives on Thursday with the long-awaited January ECB meeting. The legal obstacles to implementation of a programme of sovereign bond purchases appear to have been cleared, so investors will expect Mr Draghi to confirm a detailed and decisive plan to head off further deflationary forces.
The degree to which risk is allocated to national central banks may still cause some disagreement. Even a delivery of what the market wants may not fix the danger of dwindling inflation expectations, and political uncertainty in the region will continue to rumble along.
For political uncertainty, read Greece. There’s just six days to go until the country heads to the polls for a general election, with the left-wing Syriza party holding a steady lead.
Investors are also still digesting last Thursday’s shock decision by the Swiss central bank to stop pegging the Swiss franc to the euro.
There’s not much in the economic calendar. Germany’s Bundesbank is due to release its latest monthly report this morning, and we also get eurozone current account data at 10am GMT.
The US markets, though, will be closed for Martin Luther King day.
We’ll be tracking all the main events through the day….
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Chinese stock market suffers biggest fall since 2008 – as it …
