European Shares Higher Amid Speculation of Fresh ECB Stimulus Measures

European equity markets are expected to open higher Monday as global investors await central bank meetings later this week that could decide if further stimulus measures are necessary to reboot economies deeply damaged by the coronavirus pandemic.

Ahead of the session, investors in Europe are watching how the region gradually exits lockdown strategies that have crippled economies in Europe, however, the focus for investors will be whether central banks will announce additional stimulus measures later this week.

The U.S. Federal Reserve has a two-day meeting starting Tuesday and the European Central Bank (ECB) meets Thursday.

According to CNBC, London’s FTSE is expected to open 77 points higher at 5,827, Germany’s DAX is called 210 points higher at 10,555, France’s CAC 40 is seen 92 points higher at 4,484 and Italy’s FTSE MIB is expected to open 344 points higher at 17,095.

Asian Shares, US Futures Jump in Morning Trade

A rally in Asia may be helping to boost European shares ahead of the opening. On Monday, Asian stocks surged as the Bank of Japan (BOJ) announced more stimulus steps to help cushion the economic impact of the coronavirus. BOJ policymakers matched market speculation by pledging to buy unlimited amounts of government bonds, removing its previous target of 80 trillion yen per year. It also raised purchases of corporate and commercial debt, and eased rules for what debt would qualify.

Meanwhile, U.S. stock futures are trading higher in the early Monday morning trade as investors assessed the possibility of re-opening several key states in the United States.

New York Governor Andrew Cuomo said Sunday the state plans to re-open its economy in phases. The first phase, Cuomo said, would involve New York’s construction and manufacturing sectors. As part of the second phase, businesses will need to design plans for a re-opening that include social distancing practices and having personal protective equipment available.

Fed, ECB, Economic Reports and Earnings – Main Catalysts This Week

The Fed is widely expected to leave current QE and interest rate decisions unchanged. However, policymakers are expected to underline that its policies will be in place indefinitely to support the economy.

The ECB is expected to raise the size of its emergency bond buying package (PEPP) by around 500 billion Euros to 1.250 trillion and to continue pressing for a sizeable fiscal stimulus.

In economic news, the U.S. and European Union will release GDP estimates for the first quarter and the highly influential U.S. ISM survey on manufacturing.

Finally, 173 companies in the benchmark S&P 500 Index are scheduled to report this week, including Apple, Amazon, Facebook, Microsoft, Caterpillar, Ford, General Electric and Chevron.

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James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.