Deutsche Bank Slaps European Financial ETF

April 26th at 10:39am by John Spence

A 33% decline in quarterly profit at German financial bellwether Deutsche Bank (NYSE: DB) weighed on a struggling ETF tracking the European financial sector on Thursday.

Deutsche Bank’s first-quarter results were dinged by a hefty charge and simmering concerns over the Eurozone debt crisis. Investors are closely watching European bank stocks to gauge the potential fallout.

“Equity markets rallied and credit spreads tightened during the quarter. Nevertheless, investors, particularly private investors, remained wary after the market turmoil of last year, and this cautious sentiment affected business volumes,” said chief executive Josef Ackermann in a shareholder letter.

“Furthermore, conditions in the global economy remain challenging. In the United States, employment figures showed signs of improvement, but real estate markets remain subdued,” he wrote.

The iShares MSCI Europe Financial Sector Index Fund (NYSEArca: EUFN) was down nearly 1% on light volume Thursday. The $21 million ETF has 3.5% in Deutsche Bank shares, and other top holdings include European lenders. [ETFs for an Improving Europe]

The European financial fund has dropped about 9% the past month as rising government bond yields in Spain have put Europe’s shaky finances back in the spotlight.

“The strength and momentum of global economic recovery is still unclear, world energy prices remain stubbornly high, while in certain peripheral Eurozone states, sovereign debt levels remain elevated, and unemployment, particularly among young people, is an acute problem,” Ackermann said.

“These challenges, together with geopolitical uncertainties, could all impact global economic recovery as 2012 progresses. Against this backdrop, financial markets remain cautious – as we have seen in April, with investor risk appetite markedly lower. This inevitably impacts business conditions for our industry,” the CEO added.

U.S.-listed shares of Deutsche Bank were down 4% on Thursday.

iShares MSCI Europe Financial Sector Index Fund


The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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