The week has begun under the cloud of Sunday’s ECB bank stress tests results, with all European markets down on the news some very big banks have some very big problems.
One, Italy’s Monte dei Paschi, is down 20%. Add to that a new IFO survey in Germany showing business confidence sliding further, with a cool market reaction to Dilma Roussef’s victory in Brazil, and you might think all is bleak. Not a bit of it says one asset manager.
“After these stress tests there are no more phantom banks in Europe, the whole banking sector is under control. I think an international investor looking at Europe’s banking sector will be reassured,” said Montsegur Finance’s François Chaulet.
Italy, with nine banks in total failing the tests, finds itself under the biggest pressure. Trading in Monte dei Paschi shares has been suspended. The government has just conceded an extra 4.5 billion euros of spending cuts in its 2015 to stay within Brussels’ targets.
It is a turnaround from last week, the market’s biggest rally of the year.
