European stock markets jumped on Thursday, maintaining a positive momentum of over three trading sessions. Meanwhile, concerns over banks eased. Most sectors were green as the pan-European Stoxx 600 rose by 1%. Retail stocks recorded the highest rise of about 3.7%, while H&M shares rose by over 16% after a surprise profit in the first quarter. On the other hand, tech stocks increased by 2.5%, while banking stocks rose by 1.5%. The banking sector looked to rise beyond the recent volatility spell.
Beverages and food bucked the rising trend but dropped by 0.4%. Besides, UBS shares jumped by 3.4%. Its stock closed the Wednesday trading session 3.7% higher after the company announced that Sergio Ermotti would take over his previous CEO role at the group on April 5th. According to the EU Banking Single Resolution Board, the European banking system has remained resilient over the last three years. The banking system's resilience results from good profitability, liquidity, and solvency.
Although the board was confident about the banking system's resiliency, they maintained that they must remain vigilant. The board’s chair insisted that the European Union banking system remained committed to maintaining the legal approach of writing down AT1 bonds after equity stacks. Nonetheless, Credit Suisse asset holders lost during the UBS acquisition. The CEO at Argonaut Capital, Barry Norris, recently shared his views on the Silicon Valley Bank case.
Barry Norris believes the flight of deposits and a lack of regulation in the digital banking age marked a significant concern. He explained that what investors know might differ from the problem's nub. Regulations seem to encourage banks to invest in liquid assets and low-risk credit. For instance, the regulations might have impacted Silicon Valley Bank and Signature collapse. He concluded that Silicon Valley is a bank with issues in cash flow. The bank was solvent, although it could not meet withdrawals due to limited liquidity.
Overall, the Nasdaq Composite rose 0.73% to 12,013.47, while the Dow Jones Industrial Average increased by 141.43 points (0.43%) to 32,859.03. The S&P 500 rose by 0.57% to 4,050.83. In the meantime, Asia-Pacific markets ended in mixed reactions, with the Australia Benchmark Index attaining a two-week high. In general, US stocks increased on Thursday to record a sharp gain from the previous trading session.
Stock traders believe the regional banking crisis will stabilize soon. The FDIC aimed to fill the $23 billion hole resulting from the Signature Bank and Silicon Valley bank collapse. Thus, their plan might push large banks to encounter more costs on shares. The investors’ attention shifted to the personal consumption expenditures report that would help gauge the inflationary economic pressures. Above all, the initial unemployment fillings remained low but ticked higher last week amid a resilient labor market.
