zeb.market.flash #51: Unstable markets and transatlantic divergences
Our overview of current developments in the global banking market
And here is what this issue is all about:
West. European banks defy
In Q1 25, the global capital markets experienced a dip (MSCI World market cap. -6.4% QoQ, TSR -5.8% QoQ).
Western European banks (TSR +20.8% QoQ, USA -5.2% QoQ) offset the capital market performance of the global top 100 banks (TSR +1.8% QoQ).
At the end of Q1 25, Western European banks achieved a price-to-book ratio (P/B ratio) of 1.00x for the first time since Q3 17.
If the US tariff policy presented on April 2, 2025, materializes, further significant declines are to be expected on the capital markets worldwide.
German borrowing package drives up EUR int. rates
Inflation in Germany is expected to rise slightly to 2.6% YoY in Q1 25. As to GDP, analysts expect a shift of -0.3% YoY – the seventh GDP decline in a row.
The inverted yield curve in the euro area normalized in Q1 25 after a long time in light of increasing returns at the “long end”.
Banks are already adapting to the new interest rate environment. They are raising their mortgage interest rates and thus end the short-lived downward trend. Deposit interest rates continue to fall in line with the ECB’s expected interest rate cuts.
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