The Globe and Mail reports in its Friday edition that bank equities were trounced
worldwide on Thursday, leading
the way for a stock market sell-off that spared
no major benchmark.
The Globe's Tim Shufelt writes that an overwhelming demand for
safety dominated investor attitudes,
as the ability of central
banks to fend off economic
threats seems increasingly
doubtful.
While crude oil has been at
the crux of the recent outburst
of market volatility, bank valuations
have now begun to reflect
a grim assessment of the global
economy.
Wells
Fargo Funds analyst John Manley says: "Energy companies have
passed the ball to financials,
because that's where they get
their money. When problems spring up
anywhere, they inevitably find
their way back to the financial
sector."
This year's market turmoil has
been variably pinned on China's
economy, the oil-supply shock,
the turning of the credit cycle and
the beginning of United States Federal Reserve
tightening. Now, with central
banks around the world
increasingly resorting to negative
interest rates, global fears have
converged on the banking sector.
Banks were already under earnings
pressure as a result of loan
exposure to the energy sector.
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