European banking is on track for its best month of the year in the stock market. The Stoxx 600 financial sector rose 5% in September, driven by the European Central Bank’s decision to raise interest rates by 75 basis points to stem spiraling inflation, even as it pushes the eurozone economy forward. The interest rate hike gives a break to some margins of very distressed financial institutions in recent years and this is reflected in the development of these entities in the stock market. If it stays that way, the banking sector will close out its best month of the year since January.
Among the financial entities that benefited the most from the rally, Commerzbank stood out with a 20.8% rise so far this month, followed by the Bank of Ireland, up 18.9%. Coming behind First Spanish Bank: CaixaBank emerged with 17.1% in September. Behind him is Bankinter with an increase of 15.3%, in the distance Sabadell by 10.2% and BBVA by another 9.8%. Santander, on the other hand, is the financial company making the least profit from this rally, advancing a minimum of 6.8% in the month.
European Central Bank Vice President Luis de Guindos acknowledged yesterday that the data supports a “fundamental” slowdown in the eurozone economy and that inflation risks remain elevated. “Monetary policy has to go a very fine line in relation to interest rates, although its magnitude will depend on economic data,” he said.
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