Markets: European Banks Pause Ahead of ECB's Verdict

A Broad Retreat, But Underlying Trends Remain Intact

The decline is widespread: out of the ten stocks monitored, nine are down, and none are advancing this Tuesday. Société Générale is among the hardest hit, with a 2.09% drop on the session, despite still having a positive performance for the week (+1.37%). BNP Paribas falls 1.36% and remains almost steady over the period (+0.02%), while KBC Ancora slips 1.46%.

The movement is not isolated within the sector: the neighboring Banking/Insurance segment, which shares most of its components, also retreats by 1.26% for the day, with sixteen out of eighteen stocks declining. However, the market context remains moderate: the VIX, although up by 8.6%, stands at just 15.78 points, indicating an absence of true stress.

This downturn comes on the eve of a European Central Bank decision: markets are anticipating a 25 basis point increase on Thursday, bringing the deposit rate to 2.5%, seen as an « insurance » measure against a resurgence of inflation linked to the energy shock. An environment of higher rates traditionally supports bank interest margins, placing the sector in a wait-and-see position ahead of this deadline.

Temporary Consolidation or Strategic Shift?

Technical indicators paint a nuanced picture. The sector-weighted RSI remains at 57.9, in bullish territory, and the average price is trending above the 50 and 200-day moving averages, indicating that the medium to long-term underlying trend is still upward. The current movement resembles a consolidation rather than a reversal. However, a caveat: the sector MACD has fallen below its signal line, reflecting a slowing momentum in the short term.

Additionally, several stocks show high RSI levels — ING Groep, ABN Amro, and BCP exceed 73 —, a level near the overheating zone that may lead to profit-taking.