ECB cuts rates and downgrades growth
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What are the key market moves in the U.S. and Europe this morning?
Well, shows are high again in the United States, while oil prices push higher as supplies are hit by that storm in the Gulf of Mexico. The ECB cuts rates as expected, but revises their growth forecast down. US core producer price index ticks up a little, just as we saw with the core CPI yesterday. And today, well we found a few things to talk about, but it's not a busy day. China's activity data is out over the weekend, probably of the most interest. It's Fridays the thirteenth of September. 2024. It's the morning call from Nap. Good morning. Well US shares are higher. The close up one percent for the Nasdaq, naught point eight percent for the S P and naught point six percent for the Dow. The Russell two thousand is up one point two percent.
It has been a choppy week, hasn't it, for US shares in Europe. We've got a one percent rise in the Eurostocks fifty and the DAX. The FTSE one hundred is up naught point six percent at close, a quarter percent fall in the US dollar, but a naught point seven percent rise in the Aussie dollar, up to sixty seven point. two US cents. The pound is up half a percent, naught point four percent for the euro. Bond yields are higher, up three basis points for ten year treasuries, up four in Germany, up two for ten year Gilts, but flat yesterday for ten year yields in Australia at three point eight five percent, but a few basis points higher than that now on futures. So following the pack. And oil higher again, up two and a half percent for WTI to sixty nine a barrel.
Brent is up two percent, getting over seventy two A barrel, not because everyone's forgotten about those OPEC plus forecasts. It's all down to Francine. And gold prices hit an all-time high as well, above 2,550 per troy ounce this morning.
How did the ECB’s rate cut and growth‑forecast downgrade affect euro‑area outlook?
So overnight, the ECB, let's start with that with NABS Rodrigo Catrill in Sydney. They've dropped rates as expected, 25 basis points down to 3.5%. No forward guidance, but they have reduced their growth for. forecasts, but not their inflation forecast. Yeah.
Yeah, that's uh nice sorry, Phil. Um um Yeah, there we are. Yeah, so certainly uh um in line with expectations, only twenty five basis points rate cuts, also consistent with what they've been doing recently, uh not a lot of guidance. Um but certainly we we now have new numbers, um and and as you point out, and you know, justified, uh there's been um a downgrade to to growth, only just a small trim, uh but certainly a downgrade and um um When it comes to to the uh inflation forecast, um probably the the the thing to highlight is that over over the sort of forecast horizon they still see um the core and the headline CPI heading towards that two percent. So that hasn't changed much, uh but it's just kind of changed a little bit in the front end.
So um so that gives you the sense that uh the bank still thinks that uh inflation is heading in the right direction, it's gonna get where they want it to be. Um but it also doesn't give them the ammunition or the urgency to to cut more aggressively. Um And and overall the trims to growth and you know, uh um suggest that the You know, the they're not as comfortable as they were in terms of the growth outlook and and maybe there they still remain concerned around inflationary pressures. And in particular kind of like what's going on in Australia is that domestic driven inflation that remains sticky uh an in an impediment to um to lower levels in terms of the cash rate. Um so um but overall uh what what is interesting as well is that uh we did have a Bloomberg um
report uh coming out just after after the A C B meeting. Um and and unlike what we've seen in terms of the price action, uh the the the report is saying that the the governing council and members are still sort of open minded about this idea that maybe October um um there could be another cut, uh because the market is kind of been on a more gradual pace and in line with NAP expects the uh the next cut to be in December. Um but if there's further deterioration, particularly in terms of the growth outlook um or growth data flow coming, um then uh they they would be open to consider a a cut sooner.
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Chapters
8 chapters
1
What are the key market moves in the U.S. and Europe this morning?
0:01–1:33
2
How did the ECB’s rate cut and growth‑forecast downgrade affect euro‑area outlook?
1:33–4:05
3
Why is Hurricane Francine pushing oil prices higher and what does it mean for markets?
4:05–6:13
4
What does the ECB’s Draghi report say about future growth and possible rate cuts?
6:13–8:13
5
Is the recent rise in U.S. core PPI and stable jobless claims a cause for concern?
8:13–10:02
6
How might the U.S. federal budget deficit impact the dollar and Treasury markets?
10:02–12:26
7
What insights does the Bank of England’s inflation‑expectations survey provide for the UK?
12:26–14:55
8
What can we expect from China’s upcoming August activity data?
14:55–16:42