Today’s market chatter: Draghi and his playing the waiting game

Mario Draghi stood still as expected, but markets reacted very positively to the never-ending promise of “tomorrow, tomorrow, tomorrow”. “The ECB is comfortable about acting next month,” he said. The inflation isn’t moving forward in the proper path. Barclays believes such welcoming will be temporary unless ECB intentions come to light and turn out convincing. “A 10 basis points drop of interest rates and a negative deposit rate doesn’t seem enough to stop inflation or euro appreciation trends. Economy needs forceful action but it’s dubious we’ll see it before markets cry out for it” they warned.

The Governor of the Bank of Spain José María Linde alerted banks to keep strengthening capital and stated NPL rate slowdown will be moderate until recovery sets in. National banks have solvency rates (11.5%) below european average so Mr. Linde urges entities to deepen costs cut. ACF highlights capital enhancement pressures are affecting shareholders retribution (requirement of not surpassing 25% cash payout).

Multinational steel manufacturing corporation ArcelorMittal reported results over consensus estimations. However, Bankinter’s analysts point out the weak results, the losses and the debt level boost. Cycle recovery may improve its performance in the next quarters.  Santander believes the company is approaching rating agencies requirements and share value is attractive at current rating so they recommend to overweigh.

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