(Bloomberg) --
European banking shares are kicking off the new decade with their best start to a year since 2013, thanks to some encouraging macro news.
On the first day of trading in 2020, the Stoxx 600 Banks Index led the broader market with a 1.8% gain, following China’s latest policy move to support its economy. The sector, which lagged most peers in 2019 amid factors including a low-rate environment and poor macro data, is on track for its highest close since May.
Read: Five Things to Watch for in European Banking Shares in 2020
The strong start comes even as analysts mostly remain negative on banks, which have underperformed peers for years now. While 2019 ended with positive signs for a U.S.-China trade deal and a boost for U.K. banks after a decisive election win for the Conservative Party, the ratio between analyst rating upgrades and downgrades for the sector has dropped to the lowest level since March 2016.
With the German economy most exposed to China, lenders Commerzbank AG and Deutsche Bank AG led gains on Thursday, each up more than 5%, after China’s central bank trimmed the amount of cash that lenders must hold in reserve, and signaled continued action in 2020 to reduce borrowing costs for companies. Other rate- and macro-sensitive names advancing in Europe included AIB Group Plc, Banco Santander SA and UniCredit SpA.
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