All the latest financial and economic news, as the Shanghai stock market tumbles over 7% as regulators clamp down on speculationChina’s stock market slumps after margin trading curbsBut European shares riseThe Agenda: Eurozone QE this week? 1.26pm GMT Juho Romakkaniemi, chief of staff to European commissioner Jyrki Katainen, tweets that Europe faces some crucial days:Very important week for the European economy: #ECB 's governing council, #WEF in Davos and Greek elections. #Commission delivered its part. 12.28pm GMT Speaking of eurozone QE...analyst Lorcan Roche Kelly argues that that it may make a lot of sense for national central banks to start buying their own sovereign’s debt (one option the ECB could choose).Every time I want to say something about the #ECB, @LorcanRK does it better https://t.co/nw99kI8LaX 12.03pm GMT French president Francois Hollande has apparently declared that the European Central Bank will announce a big new stimulus package on Thursday.In a surprising intervention, Hollande told business leaders at the Élysée Palace that:On Thursday, the ECB will take the decision to buy sovereign debt, which will provide significant liquidity to the European economy and create a movement that is favourable to growth.French President François Hollande says the ECB will announce quantitative easing plans Thurs http://t.co/WNBOD9USQd pic.twitter.com/UVwEHYHcOF 11.49am GMT Fact of the day: There are at least 30,000 unemployed Britons across Europe claiming welfare benefits, including over 11,000 in Ireland and 6,000 in Germany.That’s according to a new report from Guardian colleagues Alberto Nardelli, Ian Traynor and Leila Haddou. It shows that unemployed Britons in Europe are drawing much more in benefits and allowances in the wealthier EU countries than their nationals are claiming in the UK.In Finland, Sweden, Denmark, Belgium, Luxembourg, Germany, Austria, France and Ireland the number of Britons banking unemployment cheques is almost three times as high as the nationals of those countries receiving parallel UK benefits – 23,011 Britons to 8,720 nationals of those nine countries in the UK.The findings highlight a more nuanced and complex picture across Europe than the simplistic version painted by anti-immigration and anti-EU campaigners led by Ukip and elements in the Conservative party. 11.20am GMT The Bundesbank is to cut its inflation forecast for 2015, following the slide in the oil price.It is also more upbeat about Germany’s growth prospects. “If the oil price stays at the current level, then the consumer prices in Germany will rise only a little in the current year”. 10.53am GMT Stephen Murray, energy expert at MoneySuperMarket, isn’t too impressed by British Gas’s promise of a 5% price cut in late February. “A cut in energy prices is always welcome however, just like we saw with E.ON, this decrease is small in comparison to the whopping 20 per cent drop in the price of wholesale gas over the last 12 months. Furthermore, British Gas customers will have to wait a whole month before they see any reduction in their bills at a time when energy use is at its peak.“The ball is firmly in the court of the remainder of the big six who are yet to make the next move and honour the energy savings that really should have been passed on to customers months ago.” 10.41am GMT The slump in energy prices has prompted British Gas to cut prices by 5%. Not until the end of February, though, which won’t help people turning their thermostats up to cope with the current wintery blast. 10.37am GMT Back to the slump in the Chinese stock market today.“This fall is not a surprise given how fast the A-share market has rallied, yet not that much has changed fundamentally over that time. Given the retail nature of the A-share market and the resulting wild swings in sentiment, this news has had a large impact on that sentiment.There will be underlying demand for A-shares as the market opens up (for example through the Shanghai – Hong Kong Stock Connect). These companies offer attractive growth opportunities and there are many companies which trade at attractive valuations which are not recognised by the market.” 9.52am GMT Germany repatriated 120 tonnes of its gold back to the Bundesbank’s vaults last year.“Implementation of our new gold storage plan is proceeding smoothly. Operations are running very much according to schedule.”Press release: Bundesbank successfully continues transfers of gold http://t.co/kJut0jfNc2 9.28am GMT If you want to really understand the implications of Switzerland dropping its euro peg, then check out this piece by economics professor Brad DeLong:If you only read one Socratic dialogue about why Switzerland *really* got rid of its currency peg, make it this one http://t.co/02KQ19zfYC 9.25am GMT The Swiss franc has been rather volatile this morning, as the Swiss National Bank’s seismic decision to end its peg against the euro last week ripples through the markets.It’s currently slightly weaker against the single currency, with one franc worth €0.9944, from €1.0092 last night. But that’s still much stronger than the €0.83 which it was pegged at for three years.Its 6AM and the 1min range in $EURCHF is 100 pips. Welcome to the new volatilityGood morning traders! $EURCHF interbank spread fluctuating around 18 pips and $USDCHF around 25. 9.13am GMT Although the tumbling Shanghai share prices has alarmed Chinese investors, it hasn’t caused wider ripples through the markets.Indeed, European stocks have hit their highest level since 2007, with Germany’s DAX gaining 0.3% to a new record high.Spanish, Italian and Portuguese government bond yields all down this morning. Markets not yet phased by #ECB QE national rumours 9.00am GMT 8.51am GMT Stan Shamu of IG argues that Chinese regulators should be applauded:While this is putting a dent in equities in the near term, the intentions seem good as officials continue to reign in reforms and curb excessive speculation. 8.36am GMT Hao Hong, an analyst at BOCOM International, says China’s clampdown on margin lending came as “a nasty surprise” to investors. And that means today’s selloff could continue:“With less incremental liquidity flow into stocks and dampened sentiment, the market will correct in the near term, and the move can be violent.” 8.21am GMT A swathe of Chinese stocks fell by the maximum amount allowed, during today’s rout: 8.08am GMT China’s stock market has suffered its biggest one-day fall in over six years this morning, after regulators clamped down on risky investing practices.“Regulators are concerned that shares have run too hard, too fast”. “They want a measured increase in the stock market. After all, margin financing is one of the reasons for people to be bullish on brokerage stocks, and these stocks have run particularly hard.” 8.02am GMT Good morning, and welcome to our rolling coverage of the financial markets, the world economy, business and finance.Rumour has it that EU QE, if & when introduced will be done on a national bank basis. It is thought Draghi wanted much more broad based QE.The moment of truth arrives on Thursday with the long-awaited January ECB meeting. The legal obstacles to implementation of a programme of sovereign bond purchases appear to have been cleared, so investors will expect Mr Draghi to confirm a detailed and decisive plan to head off further deflationary forces. The degree to which risk is allocated to national central banks may still cause some disagreement. Even a delivery of what the market wants may not fix the danger of dwindling inflation expectations, and political uncertainty in the region will continue to rumble along. Continue reading...
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