Europe’s top judges will give their interim ruling on Mario Draghi’s pledge to buy eurozone government debt at 8.30am GMTIntroduction: ECJ ruling could constrain a future QE programmeExperts: Draghi will look for ‘guideposts’Shares slide after World Bank cuts growth forecasts 8.41am GMT Breaking: The ECJ is saying that the European Central Bank’s Outright Monetary Transactions programme appears to be legal, as long as certain conditions are met.Those conditions include insuring that the ECB does not provide “direct” financial assistance when it buys debt issued by a eurozone member:Read out of opinion on #ECB #OMT beginning in #ECJ, says "may" be legal - seems it will take account of some German concerns 8.36am GMT The ECJ is starting to read the ruling out now. Newswires are snapping the key points.... 8.32am GMT Right, we should be getting the European Court of Justice’s interim ruling on the ECB’s bond-buying plans shortly (if you’re just joining us, check out the opening post for details)...EYES DOWN 8.31am GMT The other European markets are also in the red: 8.21am GMT Shares in London have dropped sharply in early trading, as fears over global growth hit commodity prices.The FTSE 100 has tumbled by 102 points, or 1.6%, in early trading to 6439.Shanghai #copper fell over 5% to trigger a trading halt overnight, read more here http://t.co/B5qsiusSKhEurope has been pretty sluggish, China’s still got that property overhang, Japan’s entered recession. You’ve got the U.S. and UK going fine, so it’s a patchy global growth picture - but it’s one that has definitely deteriorated from six months ago,” said “We are definitely not in global financial crisis territory, where global trade is impaired and can’t be financed. We’re still seeing commodity transactions - just at lower prices.” 8.11am GMT Interesting... Mario Draghi has told Germany’s Die Zeit newspaper that the European Central Bank is ready to buy government bonds: Talking the talk. *DRAGHI SAYS ECB IS READY TO BUY GOVERNMENT BONDS: DIE ZEIT 8.01am GMT Rating agency Moody’s has warned that the risks of Greece crashing out of the eurozone have risen, but are still lower than in 2012.Moody’s said that the general election scheduled for January 25th could have “negative credit implications” for other eurozone members, if the left-wing Syriza party wins power.“The likelihood of a Greek exit is still lower than during the peak of the crisis in 2012 and remains relatively unlikely’ While Syriza is committed to the monetary union, it has also signalled that it could seek debt forgiveness from its euro area peers. Other euro area governments are likely to reject such a request, partly because it could lead to similar demands from other highly indebted euro area countries. 7.55am GMT Today the European Court of Justice will their final opinion on the ECB’s OMT Program and the impact on a potential QE Program 7.45am GMT This morning’s ECJ ruling comes hours after the World Bank urged the ECB to launch a quantitative easing scheme.The World Bank slashed its forecast for eurozone growth in 2015 to just 1.1%, and called for a new money-printing programme to boost demand.“The danger of deflation would be compounded by the difficulties already afflicting countries in the eurozone: a shrinking working-age population, slowing productivity growth (reflecting a lack of capital-embodied new technologies), and a loss of skills among the large number of long-term unemployed.”The world bank has updated its economic forecasts. Cuts Eurozone 2015 outlook from 1.8% to 1.1%. US forecast up from 3.0% to 3.3%. 7.31am GMT Hans Nichols of Bloomberg TV says that ECB chief Mario Draghi will be looking for “guideposts” in today’s interim ruling, and for “conditions that could be forced on a future QE programme”.While investors continue to bet that we will get some form of action from the ECB next week, there still remains the small matter of this morning’s preliminary assessment by the European Court of Justice (ECJ) of the legality of the controversial and untested OMT program. The court will give a non-binding opinion at 08:30GMT on whether it agrees with the German Constitutional Court’s ruling that the ECB acted beyond its powers, though a final opinion won’t come for at least another six months or so. 7.18am GMT Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone, and business.Happy ECJ Day folks!“If the ECB committed to buy a monthly amount of government bonds until the outlook for inflation improves, it would be a much more powerful, more flexible and more credible form of QE than just naming an amount of purchases within a certain timeframe,” “It would give markets more certainty that the ECB is willing to do ‘whatever it takes’ to try and return inflation to its target.” Continue reading...
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