Before markets open on Thursday here’s what you need to know.
The ECB meets. The European Central Bank is expected to hold its key interest rate at 0.05%. Traders will be watching Mario Draghi’s press conference to find out his thoughts on China, oil and the prospects of more easing from the central bank. The decision will be announced at 7:45 a.m. ET, and the Draghi press conference begins at 8:30 a.m ET. The euro is up 0.1% at 1.0900.
Brazil’s central bank kept policy on hold. The Central Bank of Brazil held its benchmark Selic rate at 14.25%, surprising the consensus which was calling for a 50 basis point hike to 14.75%. According to Reuters, the bank has been under pressure from politicians and local businesses to raise rates in an effort to combat inflation that is running at a 12-year high, above 10%. The Brazilian real is weaker by 1.5% at 4.1580 per dollar.
Goldman Sachs donated money to keep the UK in the European Union. According to the Sky News, the investment bank has donated a “substantial six-figure” sum to Britain Stronger in Europe, a group supporting the ‘In’ campaign. However, a source close to the firm told Sky News, the donation shouldn’t be considered a partisan political intervention.
Ray Dalio is worried about the global economy. At the World Economic Forum in Davos, Switzerland, Ray Dalio, the head of Bridgewater, the world’s largest hedge fund, told Business Insider, “…the world doesn’t have a locomotive, they don’t have a country that is driving world economic growth.” Dalio also said he was unsure how effective monetary policy is, and wonders if it can spur growth.
Bill Ackman is having a rough start to 2016. Bill Ackman’s Pershing Square Holdings is down 14.5% so far in 2016. This comes after following an awful 2015, which saw the fund record its worst year on record, losing 20.5%. Valeant Pharmaceuticals, Air Products & Chemicals and Canadian Pacific are among his top 5 holdings and all down at least 9.6% so far in 2016.
Deutsche Bank is getting hit hard. After European markets closed on Wednesday, the investment bank said it expects a full-year net loss of 6.7 billion euros ($7.3 billion) due to “challenging market conditions.” In addition, Deutsche Bank said it would pay multiple non-tax-deductible legal charges of about 1.2 billion euros ($1.3 billion), and “restructuring and severance charges” of 0.8 billion euros ($872 million) related to its Private & Business Clients unit. The stock was down as much as 7% in Germany.
Barclay’s is cutting a bunch of jobs. The investment bank is expected to announce a reorganization in the coming days as CEO Jes Staley looks to shift focus to its two major markets, the US and the UK. Both the Wall Street Journal and Bloomberg have reported job cuts are coming, with Asia and other emerging markets expected to bear the brunt of those cuts.
Stock markets around the world are mixed. China’s Shanghai Composite (-3.2%) lead the decline in Asia and Germany’s DAX (+0.6%) paces the gains in Europe. S&P 500 futures are down 10.25 points at 1844.75.
US economic data is light. Initial and continuing claims and the Philadelphia Fed will cross the wires at 8:30 a.m. ET. Natural gas inventories and crude oil inventories are due out at 10:30 a.m. ET and 11 a.m. ET, respectively. The US 10-year yield is down 1 basis point at 1.97%.
Earnings season picks up. Southwest Air, Travellers and Verizon are among the companies set to report ahead of the opening bell while American Express, Schlumberger and Starbucks highlight the names releasing their results after markets close.