Monday 23 October 2017

European banks continue on a Trump roll

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE)
Colm Kelpie

Colm Kelpie

European lenders got a second-day boost after Donald Trump's presidential win on speculation that his term will lead to increased inflation and an easing of financial rules.

UBS Group and Credit Suisse Group, which get more than 35pc of their revenues from the Americas, helped lead the rally that pushed Europe's banks to their best four-day jump since July.

The biggest Swiss lender surged the most since 2011, while Credit Suisse climbed 4.9pc. A gauge tracking the industry reached its highest level since March, maintaining gains even as a slump in bond proxies such as utilities and real estate companies dragged the benchmark Stoxx Europe 600 Index lower.

By the close in Dublin, the Iseq Overall Index was down 0.03pc, or 1.83 points, to end the trading session at 6,229.69.

The leaders on the Dublin index included insurance company FBD, which increased 5.7pc to €6.45, while packaging giant Smurfit Kappa rose 4.4pc to €20.65.

On the other side of the board, the laggards included speciality baker Aryzta, which slipped 2.6pc to €38.25, while fruit company Fyffes fell 1.3pc to €1.43.

Elsewhere, while the benchmark Stoxx 600 erased an advance of as much as 1.3pc to end the day 0.3pc lower, while the Stoxx 600 Banks Index rallied 2.3pc.

The gauge trimmed its annual slump to 14pc from as much as 36pc, pushing the valuation of its companies to about 0.8 times book value, the highest since January relative to the broader market.

The volume of Stoxx 600 shares traded yesterday was about double the 30-day average. UBS's 8.7pc surge sent its shares to their highest prices since the day the UK voted to leave the European Union.

Credit Suisse, which hit a record low in July, has rebounded 37pc since then.

Additional reporting by Bloomberg

Irish Independent

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