European markets gain ground despite ECB PEPP reduction

The ECB decision to trim the PEPP programme has done little to damage market sentiment, with the euro weakening as markets gain ground. Meanwhile, easyJet has led the FTSE declines after a decision to raise £1.2 billion.

• US markets lead the way
• Euro weakens and stocks move higher despite ECB PEPP reduction
• Volatile day for airlines, as easyJet issues shares after rejecting an approach from Wizz Air 

US markets are leading the push higher this afternoon, with UK-listed stocks providing the one area of concern thanks to a notable decline for the FTSE 100. The big event of the day came in the form of the ECB rate decision, with Lagarde leading a meeting that saw the committee opt to maintain rates and asset purchases as expected. However, the emergency PEPP programme was always likely to provide the one area that could see a shift, and that took the form of a moderate reduction in its €80 billion per month purchase programme. While some may be concerned that this is tapering under a different guise, it seems the markets are unconcerned given that the ongoing QE programme which will likely run for some time yet. Instead, we saw the euro decline and eurozone markets head higher, with the promise of a supportive ECB helping to overshadow the decision to slightly dial down the emergency PEPP programme. 

It has been a tough day for airlines, with easyJet taking a 10% nosedive on a £1.2 billion rights issue while US airlines warned of a slowdown in sales thanks to rising Delta cases. The Wizz Air takeover approach for EasyJet may have been rebuffed, but it does provide plenty of clues over which companies are faring better than others. While the recent moves to reduce quarantine and testing requirements for vaccinated travellers does raise hopes of a surge in European bookings, we are looking at a second lost summer for airlines that will undoubtedly find it tough to operate without raising fresh funds. Thus while the declines seen elsewhere may prove ill-founded, there is a distinct fear that this will not be the last airline that needs to shore up the balance sheet.