Short-sellers who bet against European banks are set to lose a substantial amount of money in April after the sector bounced back from the shock downfall of Credit Suisse in anticipation of strong quarterly earnings
- one of the top shorted stocks according Ortex and S&P Global Market Intelligence - has rallied 35% since then to its highest since 2016.
Only a few weeks ago, at the peak of the banking turmoil, markets were bracing for a deep downturn and even for central banks to reverse course and start cutting interest rates. "Banks fail to reflect the positive impact of interest rates so far, they have much stronger capital bases than they've had in other times of economic weakness and therefore the European Central Bank has continued to approve buybacks," said James Rutland, fund manager at Invesco in London, which has its biggest overweight position within financials.
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