While the previously soaring banking stocks have cooled down somewhat, arguably because Italy has asked the ECB to give it until mid-January to rescue Monte dei Paschi, the DAX and CAC have immediately begun to build on the various highs struck on Wednesday. That is because it the Eurozone central bank is likely to announce an extension to its quantitative easing programme later today, with analysts expecting Mario Draghi and co. to move the bond-buying deadline beyond its current March 2017 end-point.
The big question, however, is whether this prolonged purchasing power remains at €80 billion a month, or whether it is cut to €60 billion; an added complication is that the former figure could signal a 6 month extension, while the latter may take place over a slightly lengthier 9 months. The markets may not be happy to see any kind of ‘tapering’, especially if it isn’t compensated for by a longer than forecast expansion, so there could well be fireworks as the meeting’s details are released.
The FTSE continued to benefit from the run-off Eurozone goodwill this morning, remaining above 6900 with an admittedly mild 0.2% rise. The index lacks real news of its own this Thursday, so will likely be dictated by whatever the ECB produces and how it ends up affecting the pound.