LIVE MARKETS-Rally in banking stocks still has legs
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com.
RALLY IN BANKING STOCKS STILL HAS LEGS
The banking sector .SX7P has been Europe's standout performer in 2025, rallying 45%, compared to an 8.5% rise for the broader STOXX 600 .STOXX.
Citigroup strategists remain overweight the sector given the banks' history of share buybacks and dividends and recent earnings upgrades.
"Valuations are starting to look more stretched vs history but still look cheap vs other sectors and an all-in capital return yield of ~8% is still highly attractive," writes Citi's Andrew Coombs.
"Relative earnings momentum is particularly healthy, with +8% cons. EPS upgrades YTD, driven by non-NII & costs, whereas other European sectors are still suffering downgrades," Coombs adds.
While the sector continues to receive earnings upgrades, Coombs believes that rotation into banking stocks will persist.
Within the sector, Citi prefers stocks that offer upside to consensus EPS, attractive capital return yields and have lagged the sector re-rating year-to-date. Top picks are therefore HSBC HSBA.L, Intesa Sanpaolo ISP.MI and NatWest NWG.L.
Least preferred names are Deutsche Bank DBKGn.DE, SHB SHBa.ST and UBS UBSG.S.
(Samuel Indyk)
*****
EARLIER ON LIVE MARKETS:
GERMAN OPPORTUNITY? CLICK HERE
EUROPEAN BOURSES SHRUG OFF TRUMP'S TARIFFS CLICK HERE
EUROPE BEFORE THE BELL: TRUMP DOES IT AGAIN CLICK HERE
STOCKS COP ONE-TWO PUNCH CLICK HERE
Related Articles
Can $100 Billion Change the Future of AI? The Inside Story of Nvidia and OpenAI’s Mega Partnership
TradingKey - Recently, headlines around the world spotlighted Nvidia’s deal to invest up to $100 billion in OpenAI, a move that’s already being called one of the boldest bets in the history of artificial intelligence.
U.S. Q2 GDP Commentary: Unsustainable Growth Rebound, What’s Next for the Stock Market?
TradingKey - On 25 September 2025, the U.S. released the final Q2 GDP data. The data showed that the annualised quarter-on-quarter real GDP growth rate was 3.8%, surpassing the preliminary estimates of 3% in July and 3.3% in August.
An Overview of U.S. Government Shutdowns: Causes and Consequences
TradingKey - A government shutdown is a uniquely American political event. After former President Donald Trump orchestrated the longest and most costly government shutdown in history during his first term, the risk of another shutdown has resurfaced at the start of his second term.
U.S. August PCE Preview: Four-Run PCE Bounce Challenges the Fed’s Three-Cut Plan
TradingKey - The U.S. Bureau of Economic Analysis (BEA) will release the August Personal Consumption Expenditures (PCE) Price Index on Friday, September 26, with markets closely watching how much tariff pass-through effects have influenced inflation.
U.S. August PCE: Inflation Remains the Market's Greatest Risk
Our baseline forecast anticipates sustained asset price increases. However, if inflation surpasses market expectations in the coming months, it could hinder further rate cuts and pose the greatest risk to financial markets.
