Europe Markets

The 4 charts hinting at another European crisis

Are we entering another financial crisis?
Are we entering another financial crisis?
What’s shaking up European banks?
What’s shaking up Europe's banks?
Should we be concerned about Italian banks?
Should we be concerned about Italian banks?
Things aren't as bad as markets are saying: Strategist
Things aren't as bad as markets are saying: Strategist
It is a good time to buy banks: Credit Suisse CEO
It is a good time to buy banks: Credit Suisse CEO
We have an advantage in potential mergers: BPM CEO
We have an advantage in potential mergers: BPM CEO

Riskier assets have slumped since the start of the year on concerns regarding tighter U.S. monetary policy, Chinese growth and low oil prices.

Europe has recently been added into that equation, with some major moves on Monday echoing the euro zone sovereign debt crisis of 2011.

CNBC highlights the different warning signals from the region that have accentuated a wall of worry that has spread across the globe.

Deutsche Bank CEO John Cryan
Deutsche Bank CEO says bank ‘rock-solid’

Investor fears on Monday were centered around the financial sector. Deutsche Bank bore the brunt of the selling with market watchers detailing concerns over its exposure to the energy sector and a possible cash crunch.

U.S. banks have been busy recapitalizing after the 2008 crisis but their European counterparts have been slow off the mark. Deutsche Bank has come out fighting saying it has "sufficient" reserves to service its so-called tier 1 debts.

But this was only after a near 10 percent fall in its share price on Monday and a hefty rise in the price of its 5-year credit default swaps - the price it costs to insure its debt over a 5-year period.

"The cost of insuring against Deutsche Bank defaulting has gone up two and a half times so far in 2016. That's back to levels not seen since the height of the euro zone crisis in 2011," Financial analyst Louise Cooper, founder of CooperCity, said in a morning note.

The volatility grew so great in Monday's session that well-capitalized Barclays saw is shares suspended just before the close.

For eight minutes the U.K. bank wasn't trading due to "outsized moves", according to Reuters.

After the resumption of trade, the bank's shares remained down 5.3 percent. Meanwhile, the European banking index lost 5.59 percent overall on Monday, its worst day since August 24, last year.

The Italian banking sector led the wider bourses lower Tuesday. The sector has been plagued by concerns over bad loans. Shares in Banca Popolare di Milano were sharply lower, despite reporting a 24 percent rise in net profits last year. UBI Banca was also in the red.

Greek stocks fell to a 25-year low on Monday during the heavy selling. This comes ahead of a bailout review next week but it doesn't take much for the country's risk assets to slump when investors are taking their foot off the gas.

"The potential impact of slowing global growth and negative interest rates on financial sector profitability is now being priced back into banks' valuations," Ian Williams, at Peel Hunt, said in a morning note on Tuesday.

The Athens index slid nearly 8 percent on Monday and was down 2 percent by midday Tuesday. It's now down 26.5 percent so far this year.

Meanwhile, euro zone peripheral sovereign bond spreads are widening once again. The chart above shows the widening spread between Italian and German bund yields - a crucial barometer of market anxiety.

Some economists have spoken of the European Central Bank's failure to add more stimulus to its asset purchasing program as a reason behind the move.

"We have started to see Greek, Spanish, Italian and Portuguese yield moving higher," Chris Weston, a market analyst at IG said in a note Tuesday.

"The Greek 10-year jumped 61 basis points yesterday (Monday) and there will be focus on Greek reforms in this week's Eurogroup meeting. The last thing traders need now is for Greece to come back on the radar."

Traders work on the floor of the New York Stock Exchange.
Who’s to blame for the market turmoil?

The above charts may look scary but many investors are still questioning whether markets are truly heading into another crisis. Erik Nielsen, global chief economist at UniCredit, told CNBC Tuesday that he wouldn't be selling his stocks are these current prices.

Meanwhile, William Hobbs, head of investment strategy Europe at Barclays, said that the "real economy looks in better shape than markets are telling us."

"The prospects for growth are still OK. That's not to say it's rosy out there but it's not as bad as markets are saying," he said. He added that those with a "strong constitution" would want to add to their exposure to developed markets.

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