The European Central Bank said it would slightly scale back its massive bond-buying program amid robust economic growth and inflation in the eurozone, turning the corner on its stimulus despite a resurgence in Covid-19 cases globally and signs of slowdowns in China and the U.S. that have prompted caution from the Federal Reserve. While the ECB’s move isn’t yet a plan to end its easy-money policies, it does signal the bank’s confidence in the eurozone economy’s ability to weather the rise of Covid-19 infections due to the Delta variant, with business and consumer confidence remaining buoyant. In a statement, the ECB said it would conduct purchases under its €1.85 trillion emergency bond-buying program, equivalent to $2.2 trillion, at a “moderately lower pace” in future than it has over the past six months. The ECB had decided in March to conduct purchases at a “significantly higher pace” amid worsening financial-market conditions. Inflation in the 19-nation eurozone rose to 3% in August, the highest level in almost a decade and above the ECB’s target of 2%. Analysts expect inflation to rise higher over the coming months before falling back next year, driven by energy prices and supply shortages.

The Swiss stock market closed with losses for the third day in a row on Thursday. The firm franc also hampered the Swiss stock market. The SMI lost 0.8 per cent to 12,116 points. Among the 20 SMI stocks, there were eleven price losers and seven price winners, and two stocks closed unchanged. 29.56 (previously: 31.07) million shares were traded. The market was adversely affected by declines in the two pharmaceutical heavyweights Roche (-3%) and Novartis (-1.7%). In trading, reference was made to plans by US President Joe Biden to lower prescription drug prices. Administrative measures include reviewing Medicare reimbursement for drugs based on their clinical benefit. Medicare is the health programme for people 65 and older and younger people with disabilities in the US. In contrast, Holcim (+1%) recovered slightly after its recent slide in the wake of a negative court ruling on terrorist financing in France. Nestle closed unchanged, demonstrating relative strength. Outside Switzerland, food stocks also tended to be in demand. Lindt & Sprüngli rose 0.6 per cent. Swiss Re advanced 0.2 per cent. The reinsurer expects global premium growth in the property insurance market to continue in 2021 and 2022.

European equity indices closed mixed on Thursday, as the European Central Bank's (ECB) fourth-quarter asset purchase cuts were widely anticipated by investors. The Stoxx Europe 600 index fell 0.1% to 467.6 points. In Paris, the CAC 40 and the SBF 120 advanced 0.2% each. In Frankfurt, the DAX gained 0.1% while the FTSE 100 in London lost 1%. Safran (+3.1%) benefits from a very attractive "risk/reward" ratio, according to JPMorgan, which, following a meeting with the group's management, confirmed its "overweight" recommendation and its price target of €146. Pernod Ricard (+0.9%) was supported by a recommendation upgrade from "neutral" to "overweight" by JPMorgan Cazenove, which also raised its target price to €225 from €220. In London, the airline easyJet fell 10.2% after announcing that it would carry out a capital increase of £1.2 billion or about €1.4 billion. The company also said it had received and rejected an unsolicited indicative takeover offer from a potential buyer, whose identity was not disclosed to the market. Other airlines also pulled back. In London, British Airways' parent company IAG was down 1.6%, Air France-KLM was down 1% in Paris and Lufthansa was down 0.9% in Frankfurt.

U.S. stocks fell Thursday, as concerns about slowing U.S. economic growth and rising Covid-19 cases weighed on investor sentiment. All three major U.S. indexes sank, closing near their session lows, after erasing gains notched earlier in the day. The S&P 500 and the Dow Jones Industrial Average both fell for a fourth consecutive session, their longest losing streak since mid-June. The benchmark index lost 20.79 points, or 0.5%, to finish at 4493.28 and the Dow shed 151.69 points, or 0.4%, to end at 34879.38. The technology-heavy Nasdaq Composite fell 38.38 points, or 0.3%, to 15248.25 Among the S&P 500’s 11 sectors Thursday, only three groups—financials, energy and materials—finished the day higher, with financials leading the way. For individual stocks, Moderna was the best performer for the benchmark index on a percentage basis, adding 7.8%, or $33.02, to finish at $455.92, extending its blockbuster year-to-date gains to 336%. Shares of GameStop ended higher, adding 38 cents, or 0.2%, to finish at $199.18, reversing losses that came earlier in the day after the videogame retailer reported mixed second-quarter results. Lululemon Athletica shares gained $39.86, or more than 10%, to end at $420.71, a new all-time high, after it posted revenue that exceeded its guidance and analysts’ expectations.

After the partly heavy losses of the previous day, the stock markets in East Asia are on the road to recovery on Friday. The Nikkei index is 1.1 per cent firmer at 30,341 points. The Hong Kong market also shows a strong recovery of 1.7 per cent from its stronger setback on Thursday. The gains on the other markets were more moderate. In Seoul, the shares of the two fintech companies Kakao (+2.0 per cent) and Naver (+3.3 per cent), which had been hit hard in the previous days, partially recovered.

U.S. Treasury yields fell on Thursday, as investors picked up bonds, even as a key Fed voter said that the central bank was “very close” to the hurdle needed to start curtailing bond purchases, a process that should be able to start this year. Meanwhile, investors digested weekly data on U.S. employment and the latest policy statement from the European Central Bank. The yield on the ten-year US Treasury bond continued to ease, falling 4 basis points to 1.299%. The yield on the German Bund with equal maturity was -0.360%, the same as on Wednesday evening.

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