Slump in banking stocks sign of 'lost confidence in central banks'

Markets no longer listening to central banks 'crying wolf'

Global banking stocks' sharp underperformance over the past six months could be signs of a growing fear that the global economy has reached the limits of monetary policy support, and that central banks are no longer in control writes Caspar Rock, CIO of Architas

A standout feature in the stormy start to 2016 has been the dramatic underperformance of bank stocks compared to the major equity markets. Global banks have fallen 17.7% in dollar terms year to date and some heavyweight names, which could be viewed as potentially of systemic importance to the global system, have dropped more than 25% in short order. In the face of this apparent capitulation, the big question is why, or why now? While tumbling bank stock prices may be anticipating stresses in the financial system, it is possible the markets are now also discounting the growing fear tha...