Bank stocks pressured by new capital requirements
BANKING stocks could be under pressure this morning, following news over the weekend from Basel that additional capital requirements of up to 2.5 per cent were agreed to be imposed on those financial institutions deemed too big too fail – or, to use the technical term, Global Systemically Important Banks (GSIBs).
GFT quotes two-way prices on stock indices around the clock, even when the underlying markets are closed.
US indices were by and large little changed in late trading on Friday after Europe’s close, but following the latest loss absorbency requirements, the FTSE 100 index is called to open down 20 points at 5,677. The German DAX is forecast to open down 22 points at 7,099, and the French CAC 40 is quoted to open down 11 points at 3,773.
Banking stocks likely to see the most action this morning are HSBC and Deutsche Bank, as both are seen as likely to qualify as systemically important and therefore face the maximum levy, announced by the Group of Governors and Heads of Supervision, an oversight group for world banking.
It’s going to be a milestone week for financial markets as 30 June 2011 will officially mark the end of the Federal Reserve’s “QE2” asset purchasing programme.
Quite what the immediate and short term impact will be nobody knows, but there are plenty of scare stories out there describing potential upheaval following the end of Fed buying and propping of mortgage-backed securities and bonds.
Either way, the uncertainty could well result in this being an intensely volatile week.
Adding to the risk mix for traders this week is the perhaps even more significant critical austerity measures vote in the Greek parliament.
If the measures are passed, we could well see a relief rally from gloabl stock markets – the trigger for an end of quarter buying spree.
Martin Slaney is director of global dealing operations at GFT.