Live Markets: Tactical opportunity in Europe's banks

Societe Generale SA

05/10/2026 11:12

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TACTICAL OPPORTUNITY IN EUROPE'S BANKS
Morgan Stanley equity strategists reckon the recent selloff in French banks presents a buying opportunity as the moves across financial markets echo that of previous bouts of weakness. 
Worries about the country's budget and the stalemate in parliament before the presidential election next year are wreaking havoc on French assets, sending bond yields FR10YT=RR to their highest in years. France's main stock market .FCHI has underperformed European peers. 
The three main French banks - Credit Agricole  CAGR.PA, BNP Paribas BNPP.PA and Societe Generale SOGN.PA - are down between 18% and 23% from their respective August highs. The Euro STOXX banks index .SX7E is down 8% from its August peak.
MS notes that the moves across assets bear a striking similarity to the selloff after French President Emmanuel Macron called a snap election in June 2024, and they believe the weakness leaves opportunistic traders with a possible window to step in.
"We believe the sentiment-driven pullback in European banks represents an attractive buy-the-dip opportunity," MS writes, noting that French banks were down by between 12% to 25% after Macron's election announcement. 
According to Morgan Stanley's sector model, banks rank as the second most attractive sector, after energy, supported by strong earnings upgrade trends, improving analyst price targets, attractive valuations and shareholder payouts. 
(Samuel Indyk)
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EARLIER ON LIVE MARKETS: 
WHY (US) STOCKS CAN KEEP DEFYING YIELDS CLICK HERE
MUTED OPENING CLICK HERE
EUROPE BEFORE THE BELL: MIXED START, EYES ON THE BOND MARKET CLICK HERE
THE EURO HAS A FRANCE PROBLEM CLICK HERE