European stock markets open sharply, the banking sector rebounds

by time news

New day in the green. ipopba / stock.adobe.com

UPDATE ON SITUATION After closing Monday in the green, the trend is confirmed on Tuesday.

Bank shares rebounded sharply in Europe mid-session on Tuesday, bringing all stock market indices up and underscoring the relief of investors heckled for ten days by the crisis in the banking system. The absence of new turmoil around the takeover of Credit Suisse by its rival UBS or new fears about the banking system reassures investors and allows both global indices and bank shares to progress sharply on Tuesday.

The financial compartment of the European Stoxx 600 index was the one with the strongest growth, of 3.76%, around 11:30 GMT. Some banks are experiencing spectacular growth, such as Unicredit (+7.21%), Commerzbank (+6.88%), Santander (+5.08%) or BNP Paribas (+4.07%) and UBS (+4 .07%), even if they are all still far from making up for their losses for ten days.

The financial centers as a whole are adorned with green: Paris rises by 1.63%, Frankfurt by 1.74%, London by 1.46% and Milan by 2.55%. Wall Street was preparing to keep its momentum at the open too, although more slightly according to futures up around 0.7% for all three major indexes.

Bank stocks on the right track

Banking stocks also rose sharply, with +2.21% for the sector on the Eurostoxx 600. Among the increases, Unicredit gained 2.97%, Deutsche Bank 2.43%, BNP Paribas 3.08% and UBS 3, 32%. “Stock market operators focus on reducing bank stress“, explains Ipek Ozkardeskaya, analyst of Swissquote Bank.

Banks had already rallied on Monday after a sharply lower start to the session, reassured by the European Central Bank’s update on how to bail out banks after UBS’s takeover of Credit Suisse on Sunday, some parties of which had left doubts according to Deutsche Bank analysts. Credit Suisse shares also rose 0.53% on Tuesday, and are still trading slightly above their takeover price. In Asia, the Hong Kong Stock Exchange gained 1.36% and Shanghai 0.64%. The Tokyo Stock Exchange remained closed due to a public holiday.

The New York Stock Exchange ended higher on Monday, driven by bargain hunting amid a lull after ten days of banking turmoil since the Silicon Valley Bank collapse. But the regional bank First Republic still lost almost half of its value after another downgrade from the rating agency S&P. The financial authorities of all countries strove on Monday to convince investors that the new guarantees and liquidity provided would make it possible to resolve the crisis of confidence around the banking system.

Reassuring situation in the United States

The state of the American banking sectorse stabilise“, Estimates the American Secretary of the Treasury, Janet Yellen, after the bankruptcy of Silicon Valley Bank (SVB) but also of Signature Bank, which are wobbling the sector on a global level.

«The situation stabilizes. And the U.S. banking system remains strong“, will say Tuesday morning the Minister of Economy and Finance of Joe Biden in front of an audience of bankers, according to extracts from his speech. “Cash withdrawals from regional banks have stabilized“, she will also say, ensuring that the American government is ready to act again if necessary.

The device put in place by the American central bank (Fed) to lend money to banks for a week, in order to avoid the debacle, so that those already existing, “are operating as intended to provide liquidity to the banking system» et «cash withdrawals from regional banks have stabilized», will underline Janet Yellen.


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