Introduction: European Central Bank expected to cut interest rates today
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The welcome slowdown in global inflation is clearing the way for central banks to pull down interest rates, and today the spotlight falls on the European Central Bank.
The ECB is expected to make its third rate cut of the year today, putting it two cuts ahead of the Bank of England. Policymakers are under pressure to cut after eurozone inflation was estimated to fall below the ECB’s 2% target in September (we get the final reading today too).
Economists predict the ECB will cut its deposit rate by another quarter-point today, to 3.25%, as its governing council meets in Ljubljana, Slovenia, today. President Christine Lagarde is also expected to leave the door wide open for another cut in December.
With European countries such as Germany struggling this year, lower interest rates would be welcomed by business and consumers across the eurozone.
Last week, Greece’s central bank governor Yannis Stournaras piled pressure on the governing council, dclaring that “highly restrictive” interest rates could be lowered faster than previously anticipated.
Neil Hutchison, European liquidity strategies portfolio manager at J.P. Morgan Asset Management, says it would be a surprise if the ECB don’t cut today:
“With Halloween on the horizon, we’re not expecting any scary surprises from the ECB this week. Spooked by weaker PMI business survey data, the ECB is likely to deliver a 0.25% rate cut.
Recent cooling in inflation data means they’re less burdened by potential price pressures. With minimal pushback from ECB members, markets would be surprised if a cut didn’t happen.
Beyond this meeting, the outlook is currently enveloped in a Halloween haze, with concerns over a potential growth slowdown and geopolitical tensions, amid resilient wage growth and low unemployment.”
The agenda
-
10am BST: Eurozone inflation estimate for September (final reading)
-
1.15pm BST: European Central Bank sets interest rates
-
1.30pm BST: US retail sales for September
-
1.30pm: US weekly jobless claims
-
1.45pm BST: European Central Bank press conference
-
Tonight: Annual City Banquet at Mansion House
Key events
There’s a flurry of takeover drama in the City this morning.
N Brown Group, the online fashion retailer, has agreed to be taken over in a £191m deal, led by its fourth largest shareholder, Joshua Alliance.
The recommended cash acquisition is worth 40p per share, nearly a 50% premium to N Brown’s closing share price last night.
This morning, shares have jumped to 38.5p.
Joshua Alliance owns 6.6% of the company’s shares, while almost half is owned by his father, Lord David Alliance of Manchester, who formerly chaired the company [and also played a key role in the rescue of 20,000 Ethiopian Jews from Sudan].
Overall, the Alliance Family Concert Party own 53.4% of its shares, and are backing the deal.
Mike Ashley’s Frasers Group owns 20% – one of Ashley’s many interests in UK retailers.
Uber could create ‘super app’ through bid for Expedia
Shares in Expedia, the nearly $20bn US travel booking website, are set to rally today following reports that transport and delivery firm Uber has explored a possible bid.
Uber, the Financial Times reports, has approached advisers in recent months to examine whether such a deal would be possible and how it could be structured.
It would be Uber’s bigger acquisition yet, and give it access to new growth opportunities. However, the situation is still at an early stage, as a formal approach hasn’t yet been made to Expedia and the two sides aren’t in discussions.
A deal would help Uber transform itself into a ‘super app’, offering users a wide range of services through a single application as Chinese tech groups such as WeChat already do well.
Intriguingly, Uber’s CEO Dara Khosrowshahi was previously the chief executive of Expedia.
Expedia’s shares have jumped by 7.2% in after-hours trading on Wall Street, while Uber’s shares have dropped by 2.9%.
Introduction: European Central Bank expected to cut interest rates today
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The welcome slowdown in global inflation is clearing the way for central banks to pull down interest rates, and today the spotlight falls on the European Central Bank.
The ECB is expected to make its third rate cut of the year today, putting it two cuts ahead of the Bank of England. Policymakers are under pressure to cut after eurozone inflation was estimated to fall below the ECB’s 2% target in September (we get the final reading today too).
Economists predict the ECB will cut its deposit rate by another quarter-point today, to 3.25%, as its governing council meets in Ljubljana, Slovenia, today. President Christine Lagarde is also expected to leave the door wide open for another cut in December.
With European countries such as Germany struggling this year, lower interest rates would be welcomed by business and consumers across the eurozone.
Last week, Greece’s central bank governor Yannis Stournaras piled pressure on the governing council, dclaring that “highly restrictive” interest rates could be lowered faster than previously anticipated.
Neil Hutchison, European liquidity strategies portfolio manager at J.P. Morgan Asset Management, says it would be a surprise if the ECB don’t cut today:
“With Halloween on the horizon, we’re not expecting any scary surprises from the ECB this week. Spooked by weaker PMI business survey data, the ECB is likely to deliver a 0.25% rate cut.
Recent cooling in inflation data means they’re less burdened by potential price pressures. With minimal pushback from ECB members, markets would be surprised if a cut didn’t happen.
Beyond this meeting, the outlook is currently enveloped in a Halloween haze, with concerns over a potential growth slowdown and geopolitical tensions, amid resilient wage growth and low unemployment.”
The agenda
-
10am BST: Eurozone inflation estimate for September (final reading)
-
1.15pm BST: European Central Bank sets interest rates
-
1.30pm BST: US retail sales for September
-
1.30pm: US weekly jobless claims
-
1.45pm BST: European Central Bank press conference
-
Tonight: Annual City Banquet at Mansion House