Europe open: No bank news is good news as eyes turn to US data

European shares made a strong start to Thursday’s session after a positive close on Wall Street and Asia after a month of turmoil caused by a return to misbehaviour by banks that raised renewed questions about stability in the financial sector.

The pan-European Stoxx 600 index was up 0.72% at 0715 GMT with all major regional bourses higher. The benchmark index is to end March with a fall of around 2%, although it is set to post a 5% gain for the quarter.

After two weeks of worry about whether the banking system could return to the dark days of 2008 in the wake of Silicon Valley Bank’s collapse and the scandal-ridden Credit Suisse finally being put out of its misery, investors can now return to the long-running issue of how many more rate rises are needed by central banks to tame inflation.

Some indication could come on Friday with the publication of US Personal Consumption Expenditures data, the Federal Reserve's favourite gauge of inflation.

“Another day without any unwelcome banking surprises lifted markets as investors headed back towards a risk-on approach,” said Richard Hunter, head of markets at Interactive Investor.

“Technology shares were a particular area of buying interest and have seen gains in anticipation of hopes that the interest rate hiking cycle may be nearing its end. In terms of the main indices, the Nasdaq has been the stand-out performer and currently stands ahead by 14% in the year to date.”

“Elsewhere, remarks to Congress by the US bank regulator appeared to lay the blame for the Silicon Valley Bank collapse at the door of the banking supervisors and their failure to spot the stresses, as opposed to a more systemic weakness within the system.”

“While sentiment currently remains on something of a knife-edge, no news will continue to be good news in terms of any further banking shocks. The so-called fear gauge, or volatility index, also returned to early March levels as a further indication of investor relief that the worst may have passed.”

In equity news, H&M shares gained as the world’s second largest fashion retailer posted a surprise first-quarter profits driven by its Sellpy second-hand platform.

Shares in Martin Sorrell's S4 Capital tanked after the advertising company’s losses more than tripled in a year that was marred by accounting issues.

S4 Capital reported an operating loss of £135.3m for 2022, up from £42.1m the previous year, after a series of acquisitions that left the company with a huge wage bill and caused accounting issues.