European stock markets closed higher Thursday, continuing positive momentum from the previous three sessions as concerns over the banking sector ease.
The pan-European Stoxx 600 index closed 1% higher, with most sectors in the green. Retail stocks led the pack, up 3.7%, as H&M shares climbed more than 16% after the company reported a surprise first-quarter profit.
Tech stocks were up 2.5% as risk assets returned to favor, while banking stocks rose 1.5% as the sector looks to move past the recent spell of volatility. Food and beverages bucked the positive trend and dropped 0.4%.
UBS shares were up 3.4%. The stock ended Wednesday’s session 3.7% higher after the bank announced Sergio Ermotti would return to his role as group CEO from April 5, following the recent acquisition of Credit Suisse.
The chair of the European Union’s banking Single Resolution Board, Dominique Laboureix, told CNBC’s Silvia Amaro in a Wednesday interview, “During the three last years, the resilience of the European banking system was very strong based on very good solvency and very good liquidity and very good profitability.”
“Based on that, I really believe there is good resiliency in our banking system. That does not mean that we don’t have to be vigilant,” he added.
Laboureix also stressed that the EU’s banking union was committed to upholding the legal framework of writing down equity stacks before AT1 bonds in resolution decisions in Europe. Holders of the latter in Credit Suisse saw their assets wiped out during the UBS acquisition.
But discussing the U.S. hearing over the collapse of Silicon Valley Bank and Signature Bank, Barry Norris, CEO at Argonaut Capital, told CNBC’s “Squawk Box Europe” the concerns it raised over a lack of regulation and the flight of deposits in the digital banking age were “not a one-off.”
“What we’ve heard doesn’t really get to the nub of the problem, which is that banks have been encouraged by regulation to invest in low credit risk, liquid assets, which is actually what got Silicon Valley, and in fact Signature, although Signature had other problems as well, into trouble. Essentially this was a bank with a cash flow problem … Silicon Valley was solvent but it lacked liquidity to meet withdrawals.”
Asia-Pacific markets closed mixed on Thursday, with Australia’s benchmark index hitting a two-week high as concerns over the recent banking turmoil in the U.S. and Europe eased.
U.S. stocks rose Thursday, building on the sharp gains from the previous session, as traders bet the regional banking crisis has stabilized.
