Confidence returns to banks and stock markets

Confidence returns to banks and stock markets
Credit: Wikimedia Commons

Stock markets on Tuesday confirmed their rebound begun the day before, as the crisis of confidence in the financial system appeared to subside thanks to the various measures taken to contain the risks of contagion, allowing investors to focus on this week's meeting of the US central bank.

European financial markets rose sharply – by 1.49% in Brussels, 1.42% in Paris, 1.75% in Frankfurt and 1.79% in London – but without making up for last week’s losses, generated by fears about the strength of the banking system.

Rudely attacked last week, banking stocks continued to recover.

UBS stocks shoot up by 12.12%

Swiss bank UBS's stocks shot up by 12.12%, while significant increases were also registered by Deutsche Bank (+6.05%), Commerzbank (+7.44%) , BNP Paribas (+4.15%) and Société Générale (+4.30%).

After its heavy setbacks, Credit Suisse recovered 6.96% and US First Republic bank, which was still being slammed on Wall Street on Monday, was up around 42% at about 17:00 GMT (18:00 Belgian time).

This rebound in banking stocks comes two days after Credit Suisse was rescued in extremis and bought out for a pittance by its rival and compatriot UBS.

All eyes on Feds policy decision, due on Wednesday

Governments and monetary authorities both in the US – after the collapse of Silicon Valley Bank (SVB) and Signature Bank earlier this month – and in Europe with Credit Suisse, have come up with strong responses to reassure on financial soundness.

Despite the severe turmoil in the financial sector since the SVB collapse, depositor confidence “is strong” in European banks, which are deemed sound, Andrea Enria, a senior European Central Bank (ECB) official, said on Tuesday.

Following the ECB, which last week continued on the course of monetary tightening without committing to the next rate move, investors will be watching the reaction of the US Federal Reserve, which is due to deliver its policy decision on Wednesday after a two-day meeting.

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