Among the most sold off areas of markets in the aftermath of a post-Brexit world, European bank stocks and related exchange traded funds have made a strong rebound off the lows as traders anticipate further monetary easing to support the economy.
The iShares MSCI Europe Financials ETF (NYSEArca: EUFN) gained 2.4% Thursday after rising 7.2% over the past week. In contrast, the broad Vanguard FTSE Europe ETF (NYSEArca: VGK) was 4.2% higher over the past week.
Among country-specific ETFs, the iShares MSCI Austria Capped ETF (NYSEArca: EWO) popped Thursday after the Austrian bank Erste Group Bank surged 13.6% in response to “significantly improved” Q2 results, Reuters reports. The Erse Group Bank makes up 16.3% of EWO’s underlying portfolio and the financials sector accounts for 43.5% of the ETF’s holdings.
European markets, notably the financial sector, have been recovering from a sharp, post-referendum sell-off, partly due to expectations for further stimulus measures from central banks to prop up an uncertain growth outlook.
While the Bank of England left key interest rates at a record low on Friday, the central bank signaled it is readying stimulus measures for August, Bloomberg reports.[related_stories]