European banks rise again with US elections and reduce uncertainty
Democratic victory in the American midterms reduced the uncertainty that weighed on the market, according to Bloomberg, while Deutsche Bank returns to betting on technology.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM BLOOMBERG · 2 MIN
European bank shares rose this session, and the continent's markets followed the movement. According to Bloomberg, the main explanation was the victory of the Democrats in the United States mid-term elections, which reduced the uncertainty weighing on shares in recent weeks.
Before the vote, Wall Street was awaiting the results of the polls, and American stocks were already showing signs of recovery, according to Bloomberg. With the outcome defined, part of the burden on investors was lifted, and the environment ahead became less cloudy.
Bond yields also fell during the period, according to the same agency. Less uncertainty and lower interest rates appear together in the Bloomberg report and form the backdrop of the session in Europe.
As relief reaches European banks, the technology debate heads in another direction. According to MarketWatch, shares in the sector have had five V-shaped recoveries in the last 30 months, a pattern in which sharp declines are followed by quick rebounds.
Deutsche Bank predicts a new recovery in technology and recommends overweighting the sector. For the institution, cited by MarketWatch, the risk-return profile favors the segment, which is no longer on the rise.
Caution appears on the other side of the account. Also according to MarketWatch, the positioning of investors in technology is compatible with much slower profit growth than that of the sector itself, which puts the recovery thesis in front of a central question: will the results keep up with expectations?
What changes for the investor
The immediate effect of the report is the reading that less political uncertainty can support European banks and markets, as long as the scenario remains stable, as Bloomberg suggests when recording the fall in yields. In the case of technology, the distance between Deutsche Bank's recommendation and investors' current positioning indicates that the next move should depend less on bullish signals and more on earnings developments. The next balance sheets and the trajectory of bond yields are data that deserve monitoring.
Automatically translated from Portuguese.
