European Market Update 3/8 - Markets Quiet Ahead of Central Bank Rate Announcements

- The European indices are currently trading higher in the session after a positive open. The upward drive was led by Suez, and Aegon after the companies reported earnings results that exceeded analysts’ expectations.
- Ahead of the ECB interest rate decision today European government bonds are currently trading lower. Similarly, gilts are trading lower ahead of today’s BOE interest rate decision.
- Swiss CPI for the month of February fell below estimates at 0.2% m/m and 0.0% y/y. CPI fell to its lowest y/y level since March of 2004 as energy prices, and clothing prices declined.
- Halifax house prices exceeded estimates in the UK, coming in at 1.8% m/m, well above estimates of 0.5%. House prices, which were expected to fall to 9.4% y/y, remained unchanged from 9.9% in January. House prices rose due to a shortage of homes, pushing the average house price up to £192,233.
- The ECB is widely expected to raise interest rates by 25 basis points to 3.75% today. The main focus amongst investors will probably be the post announcement conference. Investors will be monitoring Trichet for any indication as to what the ECB's next move will be. Any indication that rates are still low, or that policy is still accommodative is likely to be interpreted as a signal that the ECB will raise rates in the coming months. Investors are currently pricing in a 50% chance of another ECB interest rate hike after today's announcement. The announcement is due at 7:45 ET; the press conference is scheduled to start at around 8:30 ET.
- The Bank of England is also set to announce an interest rate decision today. While the BOE is widely expected to keep rates on hold, there is a small minority of economists that see the BOE raising rates by 25 basis points. The rate announcement is due out at 7:00 ET.
- Front month crude oil futures are currently trading just above the unchanged level in the session, and sit just beneath the $62 handle. Pot gold is currently trading higher in the session, up nearly $5.00. Similarly spot silver is trading higher by 0.75%, and front month copper futures are trading higher by 2.7%.