The exercise was perilous. The European Central Bank and its president Christine Lagarde have done admirably well: the ECB will not engage in a vast movement to reduce asset purchases of its emergency plan, put in place to fight against the ‘impact of the Covid-19 pandemic (PEPP): it will operate a ” recalibrage Of this program. This, in a nutshell, is what emerges from the central bank’s monetary policy meeting and the press conference held by Ms. Lagarde.
« Based on a joint assessment of financing conditions and inflation outlook, the Governing Council considers that favorable financing conditions can be maintained with a slightly slower pace of net asset purchases under the program. of emergency purchases in the face of the pandemic (Pandemic emergency purchase program, PEPP) compared to the last two quarters », Explains the ECB in its press release.
A “recalibration” and not a “reduction”
According to Frederik Ducrozet, ECB observer for Pictet Wealth Management, this corresponds to a theoretical average monthly amount reduced from 80 billion euros to a range of 60-70 billion, as expected by most economists. And besides, for Arthur Jurus, senior strategist Oddo BHF, “ this announcement is already being observed in practice because the ECB has reduced its repurchases of PEPP assets from 80 to 65 billion euros since the beginning of August. According to the ECB, this is a ‘recalibration’ and not a ‘reduction’ equivalent to a ‘tapering’. Christine Lagarde insisted, specifying that the PEPP would end if the financial conditions were deemed acceptable. No discussion has been undertaken for the next few months and in particular on the end of the PEPP in March 2022. More information should therefore be issued next December. »
« In this delicate communication exercise, the choice of words was important and speaking of ‘recalibration’ instead of ‘tapering’, [la présidente de la BCE] stressed that the central bank would still be present in 2022 in order to avoid the tightening of financial conditions by notably using its other purchase program the APP », Declares Nicolas Forest, head of bond management at Candriam.
More inflation … and more growth
As for the new forecasts from the central bank, inflation is now expected at 2.2% this year in the euro area, against 1.9% in June. The 2022 estimate is raised from 1.5% to 1.7% and that for 2023 from 1.4% to 1.5%. A surge in prices still considered temporary by Christine Lagarde and which should be confirmed in the fall, with the rise in raw materials, especially oil, and the fall in VAT in Germany. As for GDP growth, it is raised from 4.6% to 5% for this year, the forecast being reduced, conversely, from 4.7% to 4.6% for 2022 and maintained at 2.1% for 2023.
No real surprise, therefore, in the end, and above all … no bad surprise. the 40, on the reserve for two days pending this major meeting of the week, took the opportunity to regain a little height on Thursday. It rose 0.24% at the close, to 6,684.72 points, in a trade volume of 2.99 billion euros, after spending all morning in the red.
Sharp drop in unemployment benefit claims
It must be said that Wall Street has also given a little boost. At the time of the closure in Europe, the major American indices were up 0.1% to 0.3%, operators showing themselves reassured by the sharp drop in weekly requests for unemployment benefits, a few days after the disappointment caused by the employment figures for August, during which only 235,000 were created, far from the 733,000 expected. For the week ended September 4, registrations amounted to only 310,000, against 345,000 the previous week and 335,000 expected by analysts. The number of people receiving regular benefits fell from 2.8 million to 2.78 million in the space of seven days.
On the value side, acts lost 3.1%, the sharpest drop in the Cac 40. Investors fear that the title of the IT services company will bear the brunt of the review of the composition of the flagship index planned by Euronext.
Safran was, on the other hand, awarded 3.1% following a rating from JPMorgan, for whom the risk-return ratio is considered very attractive the day after a meeting qualified as ” reassuring »With the leaders of the engine manufacturer. The broker maintains its opinion to “overweight” the value.
Pernod Ricard gained 0.9% while the same broker raised its recommendation on the spirits group from “neutral” to “overweight” and raised its price target from 200 to 225 euros.
Sanofi yielded 1.7%. The company announced that a phase III trial evaluating rilzabrutinib in the treatment of pemphigus, a rare autoimmune skin disease, had not met its primary endpoint or secondary endpoints.