One of the least obvious consequences of the AI investment boom has been the rally in European bank stocks.
By Vlad from Bastion on
The need to borrow money to build data centers created a shortage of capital in the market and pushed long-term rates higher around the world.
The yield curve got steeper: banks take deposits at low short-term rates and lend at ever higher long-term rates. The wider the gap between those rates, the bigger their margin.
After a decade of negative rates and the eurozone debt crisis, European banks were cheaper and less efficient than their American peers. And when a sector recovers, the one that started lower rises more in percentage terms.
Bottom line: right now 8 of the 10 top European stocks by momentum score are banks.