Progress in European stocks slows as stress remains on banks
The rally in European stocks slowed late Tuesday morning as investors remained cautious that the worst of the recent banking crisis was over.
The Stoxx Europe 600 Banks index, which includes the region’s biggest lenders, fell 0.1 percent. Commerzbank was one of the biggest gainers, up 0.6%. Deutsche Bank, however, fell 1.7 percent.
The mood is reflected in broader equity indexes, with the regional benchmark Stoxx 600 down 0.1% and Germany’s Dax index flat. London’s FTSE rose 0.1%.
“At the moment there is no good news. Nadège Dufossé, global head of multi-assets at Candriam, said people are waiting for things to calm down and see if there are any more banking strains. “I expect better news on inflation to come out in the coming months but at the moment we don’t know the impact on growth. We are not out of the woods yet and will continue to see volatility.”
US bank stocks edged higher overnight in New York as investors welcomed news that US regulators could enact more policy to support fragile confidence in banks. The KBW Nasdaq Bank index rose 2.5%, with Citigroup up 3.9%. Shares of US banks rallied as regulators confirmed First Citizens Bank would buy part of its shares. Silicon Valley Bank Collapse.
Futures on the blue-chip S&P 500 and tech-heavy Nasdaq fell 0.1%.
Analysts emphasize that bank distress on both sides of the Atlantic has different origins.
“Credit Suisse and Deutsche Bank have been in the spotlight for years of predicament,” said Francesco Pesole, FX strategist at ING. “Whereas in the US it’s regional banks and more regulatory and structural issues.”
Later Tuesday, the US Congress will hear evidence of the SVB’s demise, which could provide market watchers with additional context on the lender’s failure.
In testimony released on Monday before the hearing, Michael Barr, the Fed’s vice chair of oversight, said the SVB was a “textbook case of mismanagement,” but the The regulator is “ready to use all of our tools for any size organization, as needed, to keep the system safe and sound”.
Analysts at SEB Research say the key question for regulators is to determine “under what circumstances and for what organizations, such exemptions might return relevant and under what circumstances.” In any case, the government will allow the depositor’s money to be lost.”
In Asia, the Hang Seng index closed up 1.1% after data on Monday showed China’s industrial profits fell 22.9% year-on-year.
Government debt weakened, with yields on two-year US Treasuries rising 0.07 percentage points to more than 4%, while 10-year notes rose 0.03% to 3.56%.
In the currency market, the dollar index, which measures the greenback against a basket of six parity currencies, fell 0.2%. The euro and pound rose 0.3% and 0.2% against the dollar, respectively.
Brent crude rose 0.7% to $78.66 a barrel, while WTI, the equivalent of the US, also gained 0.7% to $73.30 a barrel.