"European stress test results are streaming out and surprise, surprise, looks like most of them are passing. All but one of the 14 German banks passed - nationalized mortgage lender Hypo Real Estate Holding failed - while all four French banks tested passed. Results still trickling through but in Spain Cajasur has failed. That’s not surprising either, this is the church-controlled lender that panicked financial markets when it was seized by the Bank of Spain in May. All Spanish and Italian banks have passed the tests too.
Markets are muted in the immediate wake of the results, with the Dow spiking up briefly before dipping a bit into the red. The euro’s more or less flat. No doubt investors will need some time to digest this volley of continental data points.
“Out of the gate, we saw that all the banks appeared to be passing and we saw positive reaction on the market,” said Mark Turner, head of U.S. sales trading for Instinet. “But I think more people started reading into it, and there was speculation questioning of the legitimacy of the stress tests.”
“There’s just too much uncertainty about the stress test, the validity, the credibility,” Mr. Turner said."
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