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  • Spanish Banking Deal Boosts Euro, Asian Stocks, UK And US Futures

    The market open across Asia on Monday morning has signalled a positive start to the trading week thanks in part to the 100 billion Euro banking deal for Spain which was agreed on Saturday. The Euro is trading up higher at 1.2630 as traders feel a sense of relief with the fear of bank runs in Spain subsiding. Asian stocks are also surging with the Nikkei currently trading over 2% higher at 8625. The financials are leading the gains with a sector gain of some 2.5%. The Hang Seng is also up by some 2%. As regards the European and US markets, futures are indicating that the optimism will spread west when the markets open later today. The FTSE 100 futures currently trade at 5531 up by 2%, the Dow futures at 12,715 up by 168 points and the S&P futures show a healthy gain of 18 points to trade at 1343.

    The optimism has been tempered a little by weaker CPI figures out of China. The 3% level was much lower than anticipated and points to a weakening economy, however, traders are putting a positive spin on the news, claiming that it will give room for more policy easing in the future. The Greek elections also still hang over the markets. Pre-election polls still put the main parties neck and neck as they enter the last full week of campaigning. With luck, next Sunday/Monday will provide some much needed clarity for the markets.

    We will have to wait and see how the European banks open up later today, but the shoring up of Spain's banking system should provide welcome relief for German and French banks in particular. The UK banks should also receive a welcome boost.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jun 15 10:21 AM | Link | Comment!
  • Bove Bullish On Banking Stocks

    Dick Bove has been championing US bank stocks in his latest rally call to the market participants. Citing the eurozone debt crisis, Bove believes that banks have been massively oversold on the uncertainty of contagion which threatens to sweep through the eurozone banking sector. He claims that once this fear is removed from investors minds, the US wider market in general, and banking stocks in particular, will be the big winners: "Take this issue away and investors may realize that banks are massively oversold relative to the power of their balance sheets and their earnings potential."

    Bove states the reasons for his belief in a rise in banks as being due to world leaders and governments enacting stimulus measures to get their respective economies moving again: "Real change is required everywhere in the world and it will happen not just because politicians take some actions, It will happen because events will drive change. This may be a world where everyone looks to governments to solve their problems, but private economies are not dead."

    Jun 08 7:03 AM | Link | Comment!
  • US Banks Decline At The Close: Fed Boosts Capital Rules

    With banks and the wider market generally holding on to gains or slipping into minor losses as the markets came to a close on Thursday, you would have to ask why the fed chose this moment to announce that they would be enforcing a proposal to bring in an international agreement on higher capital standards for banks also known as Basel III? Despite pleas from the US banks to soften some of the aspects of the new proposals, the fed appears to have taken a hard line and is insisting that banks toe the line and shore up their capital ratios and rely on equity rather than debt for lending.

    This proposal will hit the larger cap, or "systemically important" banks which are supposed to hold an additional capital buffer of some 2.5% above what smaller banks will be required to hold. This will hit banks such as JPMorgan Chase (NYSE:JPM), Goldman Sachs Group (NYSE:GS) and Deutsche Bank (NYSE:DB).

    The announcement which came just before the close of trading on Thursday saw bank stocks give up slim gains or sink further into the red. Bank of America for example pushed a modest loss into a 2.9% loss at the close.

    Tags: JPM, DB, BAC, GS, Financials
    Jun 08 7:03 AM | Link | Comment!
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