The Euro STOXX Banks index will likely outperform the broader European market and target the “pandemic price gap” at 96.80/98.44, according to David Sneddon and his team at Credit Suisse in London.
Sneddon says that with bond yields starting to rise again and with 10yr German yields already having seen a break of major support and expected to rise significantly further, he maintains his bullish preference for Financials. Following a brief consolidation, Euro STOXX Banks is now retesting key resistance at 90.59/91.11, which comes from the neckline of the Q1 2020 top and the 78.6% retracement of the Q1 2020 collapse (see Chart). He continues to look for a break above this level to clear the way for a fresh leg higher to the “pandemic price gap” at 96.80/98.44. He also expects Banks to outperform with a base already in place relative to the broader European market (lower panel of Chart).