Banks Stressed And Coronavirus

Banks Stressed And Coronavirus

London Capital Group  | Jun 26, 2020 11:11

  • European markets open high, Asia mostly up.

  • Futures point to lower open on Wall St.

  • US reports highest daily rise in virus cases.

  • Banks pass Fed stress tests but buybacks deferred.

Inspiration

“Remember that stocks are never too high for you to begin buying or too low to begin selling.” – Jess Livermore

Markets

Shares in Europe look soft at the open. The first weekly rise in European coronavirus cases “in a long time”(according to the WHO) weighing on optimism. At the same time, Wall Street looks on course for a weaker open. Banks passed stress tests but the Fed capped dividend payments and deferred buyback schemes, while Nike (NYSE:NKE) earnings disappointed. Chinese markets are closed today but the rest of Asia fared better. That’s baring Quantas airlines, which dived over 9% after announcing plans to issue new shares.

Coronavirus

Everybody knew COVID-19 cases were likely to rise again when lockdowns were eased but share prices had gotten so overbought when we got there that it’s still causing some jitters. The concept that governments will not commit to new national lockdowns in a second wave is still keeping a floor under shares.

But the record daily rise in US cases at best shows the recovery will not be a V-shape because reopening is delayed. The weekly rise in cases in Europe stems mostly from countries who are still in the middle of the first wave, but does risk pushing back the timeline for further easing travel restrictions.

Banks Stressed

It was not exactly a clean bill of health for US banks from the Fed. Our assessment in yesterday’s note about the dividends staying but buybacks being deferred happened. The cap on dividends and the conclusion that some banks would “get close to minimum capital levels” under pandemic scenarios was a negative surprise. Major US bank shares look on course for opening declines in around 3-4%.

Chart: Bank Stocks (year-to-date)

Bank Stocks (Year-To-Date) Chart

US bank shares ticked higher after passing Fed stress tests, and being given the green light to pay dividends. BUT they still way behind the S&P 500 this year. Lots of room to makeup.

Original Post

London Capital Group

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Polski Português (Portugal) Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+

Download the Investing.com App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.

Investing.com is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.