Reuters blog archive
The big question of the week is whether financial market gyrations continue, worsen or calm. European stocks are being called higher at the open.
Greece has been effectively shut out of the bond market. If it and others on the euro zone’s southern flank come under persistent market pressure, in a way that hasn’t happened for two years, the onus on the European Central Bank to act will grow and grow.
None of the countries likely to be in the firing line appear to qualify for the conditions attached to the ECB’s still-unused OMT bond-buying programme, the legality of which is under review by the European Court of Justice.
So full-on QE might be the only option to restore calm if the turmoil persists or worsens. We’re a long way from that yet and internal divisions within the ECB may rule it out altogether. Maybe that dawning realization, as the Federal Reserve prepares to turn the money taps off, has contributed to the unnerving of investors.
France will submit its 2015 budget to the European Commission today and, after a respectable period of consideration, it is likely to be thrown right back.
Paris has confirmed it will yet again miss the EU’s debt limits, failing to achieve a budget deficit of three percent of GDP until 2017 four years after it should have done.
The European Court of Justice holds a first hearing on the legality of the European Central Bank's Outright Monetary Transactions programme. There won’t be anything definitive today but it serves to rekindle debate about the limits of the ECB’s powers.
In February, the German Constitutional Court asked the European Court to rule on the legality of OMT, the mechanism that drew a line under the euro zone crisis when it was unveiled in 2012. The court may give guidance about how best to make a final ruling which is expected in late spring next year.
The predictable battle lines were drawn at the G20/IMF meetings in Washington - most of the world urged Europe to do more to foster growth while Germany warned against letting up on austerity. The argument will doubtless be reprised today when euro zone finance ministers meet in Luxembourg.
Given a ghastly run of German data last week and sharp cuts to its growth forecasts by the IMF and Germany’s economic institutes, Berlin’s stance looks increasingly odd but Finance Minister Wolfgang Schaeuble continued to make it abundantly clear he will not countenance any more public spending in the one European country that could really afford it.
After a stunning fall in German industrial orders for August – the 5.7 percent monthly drop was the largest since the global financial crisis raged in 2009 – industrial output for the same month has just plunged by 4.0 percent, also the biggest fall in five years.
After Europe’s largest economy shrank in the second quarter there had been hope of a pick-up in the following three months but the thrust of recent data suggests it will be lucky to achieve any expansion at all.
France is unveiling its 2015 budget right now and it’s not making pretty reading, confirming that Paris will not get its budget deficit down to the EU limit of three percent of GDP until 2017, years after it should have done.
The health minister has said the welfare deficit is expected to run nearly one billion euros over budget this year and data on Tuesday showed France's national debt hit a record high in the second quarter, topping two trillion euros for the first time. It will near 100 percent of GDP next year.
from Expert Zone:
(Any opinions expressed here are those of the author and not of Thomson Reuters)
Since April, the stock market has been in a frenzy after a long period of utter gloom. In quick succession, the Sensex jumped month after month to cross 26,000 on July 7. This was not mere euphoria created by the election of the Narendra Modi government, with a single-party majority in the Lok Sabha after a long time.
from India Insight:
By Shashank Chouhan and Sankalp Phartiyal
The Indian movie business, led by the Mumbai-based Hindi film industry, hopes Finance Minister Arun Jaitley's budget will reduce the tax burden on movie studios as well as theatre owners and operators, and will provide incentives that would let them open more theatres around the country to boost ticket sales.
from Expert Zone:
National agenda to bring $100 billion of domestic household savings in capital markets in next five years
(Rajiv Deep Bajaj is the Vice Chairman and Managing Director of Bajaj Capital Ltd. The views expressed in this column are his own and do not represent those of Thomson Reuters)
India is an attractive investment destination for foreign institutional investors, due to its vibrant economy, favourable demographics, high growth potential and well diversified capital markets. In fact, the benchmark Nifty has representation from 10 broad sectors, four with weightage in double digits.
from India Insight:
In his maiden budget, Railways Minister Sadananda Gowda said the bulk of India's future railway projects will be financed through public-private partnerships and that his ministry would seek cabinet approval for allowing foreign direct investment in the state-owned network. (Click here for Rail Budget highlights)
India Insight spoke to people at the New Delhi railway station for their thoughts on the railway budget: