3/ DON'T BANK ON IT Q1 has been interesting for the banks. Economic euphoria in January was followed by a reality check in February, when investors decided rates would likely rise some more but the world would avoid recession - a sweet spot for financials.
March brought home the impact of tighter credit conditions. Two mid-tier U.S. lenders folded as customers pulled their deposits and ran for the hills. Things reached boiling point with Credit Suisse's hastily arranged takeover by rival UBS . The whole debacle wiped almost $180 billion off the value of Europe's banks at one point. The sector has since recovered, but it's still worth $70 billion less than it was before Silicon Valley collapsed in early March.
UBS, Deutsche Bank , Santander and Barclays are some of the big guns reporting next week - along with Credit Suisse's earnings swan song.
4/ GUESS WHO'S BACK? European currency bulls. And they're hoping for some hawkish commentary from the European Central Bank's policymakers and for plenty of data that suggests the central bank could keep rates higher for longer than the Federal Reserve. The premium of U.S. market rates over their European counterparts reached their narrowest in many months in early April, on the view that U.S. rate cuts are coming later this year while borrowing costs in Europe have further to climb. Those expectations have pushed the euro, the pound and the Swiss franc to multi-month highs, although this rally could lose steam as markets reassess whether Fed cuts are really coming.
Anything that dents the dollar's yield appeal should help
keep European currencies looking perky, at least for now.
5/ ON THE EDGE The outlook for European stocks is on a knife-edge, as a resilient economy clashes with prospects of stubborn inflation and tighter monetary policy.
First-quarter eurozone GDP data is due April 28. Output indicators analysed by consultancy Capital Economics show the bloc's economy has expanded.
Inflation reports for Germany and Spain may also reveal price rises have been sustained and are sticky. But March's market turmoil caused by U.S. bank failures is not viewed as likely to dissuade the ECB from hiking rates. Goldman Sachs sees the euro zone deposit rate rising to 3.75% by July.
Equity investors remain cautiously optimistic. The STOXX 600 index has gained 2% this month.
But German construction companies are reporting cancelled
orders and euro zone consumer confidence is weak. Robust
first-quarter growth may not mean Europe is out of the woods
yet.
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US tech stocks regain some lost ground Ueda's YCC conundrum European banks rollercoaster quarter Euro zone GDP vs STOXX 600 How the euro has moved ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Compiled by Amanda Cooper; Graphics by Vineet Sachdev and
Sumanta Sen; Editing by Christina Fincher)
