Live Markets: Nice weather forecast for banks in 2025?

Huntington Bancshares

07/01/2025 17:42

* 
      Nasdaq slides ~1.5%, S&P 500 off ~0.8%, Dow dips ~0.2%
    

        * 
      Cons Disc weakest S&P sector; Energy leads gainers
    

        * 
      Euro STOXX 600 index rises ~0.3%
    

        * 
      Dollar edges up; gold, crude rally; bitcoin down >4%
    

        * 
      U.S. 10-Year Treasury yield rises to ~4.67%
    

  
Welcome to the home for real-time coverage of markets brought to
you by Reuters reporters. You can share your thoughts with us at
        
    
    NICE WEATHER FORECAST FOR BANKS IN 2025?
    UBS analysts led by Erika Najarian asked in research
distributed on Tuesday whether banks can "have all the nice
things in 2025?" The thinking so far seems to be yes. 
    Some nice things the UBS analysts cite include stronger loan
growth, a capital markets renaissance and deregulation as well
as higher rates and no hiccups in credit quality. 
    And while valuations, at 12-13x, are near the top of
'absolute ranges,' Najarian describes banks as "undemanding
relative to the broad market." 
    For the analyst, all this suggests potential positive
revisions to EPS. But while positioning is light among long-only
and macro investors and stocks have lost ground since the
November 2024 election, Najarian suggests that "investors should
pick their spots in '25."
    And from stocks covered, Najarian sees money center banks
having most exposure to the positive themes for 2025. 
    Now looking at a neutral rate of ~4%, which is 100 basis
points higher than when UBS had last revisited, the analyst
notes that from the list of good things, "the only thing that
wasn't a straightforward positive was higher-for-longer rates." 
    As a result, Najarian prefers money centers, which have
asset-sensitive balance sheets. This is because if loan growth
comes back she expects deposit competition to accelerate,
especially as banks "retain their liquidity profiles relative to
their balance sheet size." 
    With this in mind the analysts list four top picks for 2025.
These include Bank of America  BAC.N , which they upgraded to
'buy' with a $53 PT, Wells Fargo  WFC.N  with higher-for-longer
good for its net interest income (NII) and PNC Financial
Services  PNC.N , which they say is poised to have a strong year
with record NII.
    The also include Huntington Bancshares  HBAN.O  saying it
"zigged (invested) when everyone zagged (battened down the
hatches), and now benefits from strong loan and deposit growth
trends today."
    On Tuesday the S&P 500 banks index  .SPXBK  is up ~1.3% with
BAC one of the top gainers, up 1.7%, while WFC is up 0.6%, HBAN
is up 0.3% vs a ~0.5% gain for PNC.
    
    (Sinéad Carew)
     *****       
    
    
    FOR TUESDAY'S EARLIER LIVE MARKETS POSTS:
    
    JOLTS, PMI, TRADE BALANCE: RATE CUT CAN KICKED DOWN THE ROAD
- CLICK HERE
    
    U.S. STOCKS GYRATE AS TRADERS DIGEST DATA, EYE RISING YIELDS
- CLICK HERE
    
    ANALYST SEES BITCOIN OVER $200,000 BY END OF 2025 - CLICK
HERE
    
    S&P 500 INDEX: SANTA DISAPPOINTED, BUT NEW YEAR STILL BRINGS
SOME CHEER - CLICK HERE
    
    HIGH EQUITY VALUATIONS NO IMPEDIMENT TO FURTHER GAINS - UBS
- CLICK HERE
    
    GOING FOR GOLD - CLICK HERE
    
    SPORTSWEAR SECTOR'S CYCLICAL DOWN-CYCLE IS ENDING - BOFA -
CLICK HERE
    
    DON'T SELL EUROPEAN AUTOS WHEN SENTIMENT IS AT A TROUGH -
CLICK HERE
    
    EUROPEAN SHARES MIXED - CLICK HERE
    
    EUROPE BEFORE THE BELL: FUTURES RETREAT - CLICK HERE
        
  
        INFLATION RUNS HOT IN THE EURO ZONE - CLICK HERE
    
     

 (Terence Gabriel is a Reuters market analyst. The views
expressed are his own)