There are a number of market-relevant events going on today in Europe.
First off, the European Central Bank is having their first policy meeting for 2019. With weakening economic growth around the world, the European Union has also felt it and fundamental reports have been suboptimal lately. With that in mind, investors expect the ECB’s interest rate decision to be not to hike rates yet and keep them at 0%, since inflation is still far away from the target level. We also expect a number of reports from the ECB and a speech by President Mario Draghi, which may offer further insight into what the ECB is planning for 2019.
Moreover, the annual economic forum in Davos is currently taking place in Switzerland. The issue of the global trade war is naturally taking center stage at Davos. IMF Director Christine Lagarde said that the conflict is exacerbating the otherwise natural economic slowdown in China and that if the pace remains unchecked, it could spell trouble. Another issue that came up was Italy’s budget, which caused much agitation at the end of 2018 in the EU. Now that the IMF has revised its forecast for Italy’s GDP growth lower, investors were worried what this would mean for the budgetary deficit, but Italy’s finance minister stated the deficit itself was based on a conservative forecast which matches the IMF’s, so there is no cause for worry.
