As Britons voted in the general election to favor stronger banks and miners lent support, the European Central Bank signaled the end of rate cuts. According to Reuters, European shares swayed on Thursday as the STOXX 600 ended in a sporadic session in percentage terms and Britain’s Blue chip (FTSE) was also down 0.4 percent.
Due to the ECB cutting inflation forecasts for the euro zones, the ST7P temporarily turned negative and European equalities hit a session low while banking stocks. Other banks such as SX7E also was last up 0.5 percent and also touched a session low.
Dr. Frank Engels, head of multi-asset and investment committee at Union investments, stated, “In essence, it means the low interest rate environment will remain for quite a long time and that will be a headwind to the profitability of banks”. He included that “that it will provide monetary accommodation for quite a substantial time to come.”
Banks throughout Europe are attempting to rescue troubled vendors from the end in rate cuts. Rome put pressure on heavyweights Instesa Sanpaolo (ISP.MI) and Unicredit (CRDI.MI) to take part so other banks may also take similar actions. As a result, Intesa rose 1 percent and Unicredit gained 3.2 percent. Other Italian banks were able to recover since they were allowed to join the state in the attempt to save troubled regional banks in the Veneto region.
Stefano Fabiana, fund manager at Zenet commented on the situation “The important thing is to get a solution fast and remove the uncertainty” and “Santanter Wobbled a bit early yesterday but then it went positive. And it’s the same thing here.”