Stock markets have been rocked by the weekend’s events in US banking, but there seems more to come, says Chris Beauchamp, chief market analyst at online trading platform IG.

Wall Street stages a bounce

“US stocks have had a busy start to the week, but have overall succeeded in making gains as the actions of US regulators provide some comfort to worried investors. The same cannot be said of Europe, which is deep in the red as traders this side of the Atlantic wait to see whether the pressure on European banks will turn into something that requires authorities to step in. It promises to be a roller-coaster week thanks to tomorrow’s CPI and Thursday’s ECB decision, leaving markets at risk of further falls.”

Worries about contagion trump interest rate concerns

“The prospect of further interest rate hikes has certainly receded today, but the real focus for now is on worrying about how far the crisis will spread. It wouldn’t be a crisis without heavy falls for European banks, and the sector hasn’t disappointed in that respect. Policymakers have not been too proactive thus far, but they may find the market forcing them into action fairly soon.”

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