While the Standard’s and Poor’s 500 may have been down around 1% in Monday’s trading, Citigroup (NYSE: C) sold off more than 3% to close at $28.38. This performance was replicated all through the financial sector as the SPRD Select Fund for Financials (NYSE: XLF) closed at $12.97/share, down 2%. With Italy’s debt market in upheaval those U.S. banks with the greatest exposure to the so-called “PIIGS” of southern Europe are continuing to be under extreme share price pressure. Citigroup recently reported net exposure to “PIIGS” debt of $7.2 billion.
It seems the market was unimpressed with the change at the top of Italy’s government, though 10 year bonds yields did dip below 7% on Friday, which saw Silvio Berlusconi step aside as Prime Minister after an embarrassing parliamentary budget vote saw the entire opposition party walk out. He has been succeeded by Mario Monti, former EU competition commissioner and international adviser to Goldman Sachs.
Since what was an obvious short-covering rally in the financials that started back on October 4th which saw Citi’s stock rally more than $12 or 57% from its low near $21/share the stock has since given back almost half of that run in just 11 trading days.
Citigroup’s performance mirrors most of the major U.S. banks’ with Morgan Stanley (NYSE: MS) staging an even more impressive 70% rally while Bank of America (NYSE: BAC) only staged a 45% rally. Bank of America is also the stock whose price has corrected the most off that rally high, having tested $6.00 twice in the past three trading days. They have, according to their latest 10-Q SEC filing, $6.52 billion in exposure to Italian debt.Previous Post » Stocks Open Low, US Bonds Rise On Italian Debt Worries