Statements by the US Federal Reserve on further monetary policy on Thursday boosted financial stocks in particular.

The European industry index Stoxx Europe 600 Banks rose by 2.1 percent in the morning.

The shares of Deutsche Bank rose by 3.1 percent and thus sat at the top of the Dax values.

Commerzbank was the most successful stock in the middle segment M-Dax with a plus of 3.3 percent.

Tim Kanning

Editor in business.

  • Follow I follow

    The US Federal Reserve initially did not change its monetary policy at its interest rate meeting.

    But, as is so often the case, it was the hints of Federal Reserve President Jerome Powell that many investors listened carefully: Powell was more confident about the further economic development in the United States and, above all, assessed the recent rise in inflation more critically than before.

    Most members of the Fed committee were in favor of a rate hike within two and a half years, it said.

    And on top of that, Powell mentioned unusually openly that a reduction in bond purchases was being discussed.

    "Turnaround in key interest rates within reach"

    In the markets, many saw the comments as a surprise and as preparation of investors for a normalization of monetary policy.

    "Against the background of significantly increased inflationary pressure, a key interest rate turnaround now seems within reach in 2023," judged LBBW.

    A significant minority of the monetary authorities consider such a step to be possible in the coming year.

    Not only the German banks, but also foreign financial stocks were among the most popular papers on Thursday.

    In the Euro Stoxx 50, the major banks Santander, BNP Paribas, Intesa Sanpaolo and ING took the top positions, while the stocks of JP Morgan, Bank of America and other institutions were in demand on the American stock exchanges.

    Banks would benefit from a rise in interest rates because many interest-linked products, especially loans, would bring them more money again.

    Also, an increase in bond market yields would bring them back better income with lower risks.

    Even if other major investors would switch their money from the stock to the bond markets, this would mean additional business for the banks.

    Burden on the stock markets

    Beyond financial stocks, an increase in bond yields would of course weigh on the now highly valued stock markets. The yield curve reacted quickly to Powell's remarks, with the bottom of the curve showing the largest movement, as Janus Henderson's Oliver Blackbourn pointed out on Thursday. Five-year US Treasury bond yields rose around 0.1 percent, and the benchmark ten-year bond yield also rose. In return, the major American stock indices posted losses.

    The Fed also shifted the balance on the foreign exchange market. The dollar rose sharply. The exchange rate of the euro against the American currency continued on Thursday from the heavy losses of the previous evening. The common currency was trading at $ 1.1950. On Wednesday afternoon, the European Central Bank set the reference rate at $ 1.2124.