European Stocks Seen Sharply Higher on Draghi Hopes
European stocks are expected to open sharply higher on Monday on hopes that the European Central Bank and U.S. Federal Reserve will this week deliver measures to boost growth and contain the euro zone debt crisis.
The FTSE 100 was expected to open 25 points higher, the DAX was called 72 points up and the CAC 40 was expected to open 30 points higher.
The next few days are seen as crucial for financial markets, with both the ECB and Fed due to hold meetings on monetary policy, while U.S. Treasury Secretary Tim Geithner on Monday visits Berlin and Frankfurt to meet with Germany’s Finance Minister and Mario Draghi, the ECB President.
In a series of interviews over the weekend the head of the Eurogroup, Jean-Claude Juncker, said the euro zone is at a decisive point with no time to lose given soaring Spanish borrowing costs.
"I have no doubt that we will implement the agreements of the last summit. We still need to decide what we will do when. That depends on the developments of the next days,” said Juncker in interviews with Germany's Sueddeutsche Zeitung and France's Le Figaro.
His comments followed similar pledges from German Chancellor Angela Merkel, Italian Prime Minister Mario Monti and French President Francois Hollande and comes as a poll in Spain showed support for Prime Minister Mariano Rajoy falling sharply following his decision to impose new austerity measures.
HSBC is expected to report first half earnings at 10:15 CET, with analysts expecting the bank to have made a pre-tax profit of more than 12 billion dollars. The numbers, however, are likely to be overshadowed by concerns over a money laundering probe in the United States and HSBC’s exposure to the rate setting scandal that has already cost former Barclays CEO Bob Diamond his job.
UK chancellor George Osborne has told the Financial Times he wants an independent review of the Libor scandal in the UK. The Financial Service Authority’s Martin Wheatley will lead the investigation which should make recommendations by the end of September.
His comments came as the German market regulator said it widened its investigation into the role of German banks in the rate setting scandal.