Positive changes underpin European stock market rally

European stock markets have staged a fierce rally since early March, underpinned by a series of shor...

European stock markets have staged a fierce rally since early March, underpinned by a series of short-term positive developments. The first is that bank reporting has surpassed expectations. Q1 2009 saw the highest period of bond issuance/refinancing on record. In Europe alone, deals worth €865bn were completed. This is a profitable activity for a number of banks, particularly investment banks. In addition, conventional spread business also remains quite wide. These factors, combined with fund managers' extreme underweight positioning in the banks, set up the conditions for a rally. For t...