Thursday preview: ECB announces policy decision

The European Central Bank announces its latest policy decision on Thursday with analysts expecting no changes to key rates or the asset purchase programme.

While no surprises are expected this month, the ECB’s raft of stimulus measures unveiled in March will come under the microscope amid deflation and a stagnant eurozone recovery.

In March the ECB said it would increase monthly purchases under the asset purchase programme by €20bn to €80bn from April, cut the benchmark interest rate five basis points (bps) to 0% and lower the deposit facility rate 10bps to -0.40%.

President Mario Draghi is likely to be questioned on the effectiveness of the measures at Thursday’s press conference following the ECB's policy announcement.

Economic projections for the eurozone, produced jointly by euro-area national central banks and ECB staff members, will also be in focus. Any remarks on the impact of a possible Brexit on the bloc’s economy will be of particular interest following stark warnings from various economists and leaders.

At the last economic guidance provided in March, the ECB cut its estimates for annual gross domestic product to 1.4% in 2016 from December’s 1.7% forecast. The 2017 estimate was kept at 1.7% in 2017.

In early May, Eurostat also revised its estimate for GDP in the first quarter to 0.5% quarter-on-quarter from a previous forecast of 0.6%. Year-on-year first quarter GDP was forecast at 2.1% growth, down from an earlier 2.2% estimate.

Meanwhile, Eurostat on Tuesday said deflation in the euro-area eased in May. The consumer price index fell an annualised 0.1% in May, as expected by analysts, compared to a 0.2% drop in April.

The improvement was driven by increases in food, alcohol, tobacco and non-energy industrial goods. However, energy prices continued to fall, albeit at a slower pace.

The ECB, which is targeting inflation of just below 2%, in March estimated that inflation this year would come to just 0.1%, revised down from December’s forecast of 1.0%. Inflation estimates for 2017 were cut to 1.3% from 1.6%.

“Draghi has tried everything in his powers to stimulate the stubborn eurozone, and although inflation has ticked up slightly, he has yet to make any real inroads," said Dennis de Jong, managing director at UFX.com.

Thursday 02 June

INTERIM EX-DIVIDEND DATE
A&J Mucklow Group, Associated British Foods, Blackrock Frontiers Investment Trust, Cardiff Property, Cerillion , Debenhams, easyHotel, Grainger, Greencore Group, Jersey Electricity 'A' Shares, Northern Venture Trust, Renew Holdings, SSP Group , Stride Gaming, Titon Holdings, Zoopla Property Group (WI)

QUARTERLY EX-DIVIDEND DATE
GLI Alternative Finance , Premier Energy & Water Trust, SQN Asset Finance Income Fund Limited C SHS NPV, UIL Limited (DI)

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Continuing Claims (US) (13:30)
Crude Oil Inventories (US) (16:00)
ECB Interest Rate (EU) (12:45)
Initial Jobless Claims (US) (13:30)
Producer Price Index (EU) (10:00)

FINALS
Iomart Group, Johnson Matthey

SPECIAL EX-DIVIDEND PAYMENT DATE
Marks & Spencer Group, Marshalls, Northern Venture Trust, Taylor Wimpey

AGMS
Advanced Medical Solutions Group, Augean, Camellia, EKF Diagnostics Holdings , F&C Commercial Property Trust Ltd., Gama Aviation , Hygea VCT, International Public Partnerships Ltd., Invesco Perpetual UK Small Companies Inv Trust, Ruspetro, Shanta Gold Ltd., VPC Specialty Lending Investments

UK ECONOMIC ANNOUNCEMENTS
PMI Construction (09:30)

FINAL DIVIDEND PAYMENT DATE
Croda International, Mitsubhi Electric Corp., Smart Metering Systems, Toyota Motor Corp., TT Electronics

FINAL EX-DIVIDEND DATE
Aberdeen New Thai Inv Trust, Augean, Billington Holdings, Flowtech Fluidpower, Gamma Communications, Great Portland Estates, Headlam Group, Hilton Food Group, HSS Hire Group , Inspired Energy, JPMorgan Euro Small Co. Trust, Keywords Studios, Laird, Marks & Spencer Group, Marshalls, Mckay Securities, Moss Bros Group, Nasstar, National Grid, Pacific Assets Trust, Powerflute Oyj (DI), RTC Group, Spire Healthcare Group, Staffline Group, Synthomer