Market chatter: ECB’s talking yet non acting

Inflation figures are alarming, however Draghi believes in the firm Eurozone economic recovery, as confidence and activity leading indicators display. Link foresees that the ECB will wait until the European Parliament elections to adopt new monetary policy measures if necessary by then.

Head of the IMF Christine Lagarde warned about a slow and under-potential growth if central banks don’t take aggressive steps. Natalia Aguirre, from Renta 4, expects no action in the short term unless recovery fizzles out or deflation intensifies.

“Mr. Draghi doesn’t rule out implementing stimulus plans and unconventional measures. Beyond the interest rates decision, the relevant matter is the nature of his speech,” she believes.

Market makers considered it likely due to the looking-up economic situation and the notable financing conditions improvement together with ECB denying deflation risks and finding current low inflation just temporary.

There are more issues in today market chatter:

-ACF. La Caixa considers leaving Prisa’s capital. Signed bonds would be converted by €1.03/share. It is negative as La Caixa was one of the financial entities that supported the economic viability of Prisa.

-The Spanish bank Bankinter got its rating enhanced from Ba1 to Baa3 by Moody’s, reaching investment level. A new boost for upward trend prompted by Spain’s economy prospect and credit rating improvement. Moody’s highlights the sound performance during the crisis. BANKIA considers a 14E 1.7x price to net asset value is relativelty too high and recommends to reduce where as RENTA 4 and ACF foresee a positive impacto n share price despite the latest rises.

-SANTANDER. Although growth recovery may allow inaction (indeed March PMI positively surprised) and ECB can need more time to launch its long-awaited plan for SMEs, the truth is verbal speech impact on credit markets has an expiry date.

-BANKINTER. Banks see improvent signs in defaulting and investors appeal. BBVA has reduced the doubtful debts for five consecutive months and Sabadell reported to expect a strong decline in the next three years. Banks price shares show the increasing attractive of the sector.

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