Short-sellers who bet against European banks have lost an estimated $1 billion in April, after the sector bounced back from the shock downfall of Credit Suisse and in anticipation of strong quarterly earnings.
The STOXX European banks share index has risen as much as 18% from late March’s lows, with Italy’s UniCredit – one of the top shorted stocks according Ortex and S&P Global Market Intelligence – rallying 35% since then to its highest since 2016.
Rate hikes have significantly boosted interest income and led experts such as Carlo Franchini, head of institutional clients at Banca Ifigest in Milan, to suggest that “it is not time yet to leave the financials out of your portfolio.”
This is a dramatic turnaround from just a few weeks ago, when markets were bracing for a deep downturn and even for central banks to reverse course and start cutting interest rates.
