Bank stocks rally and the worst may be over – but don’t pop the champagne just yet

The euphoria that greeted the latest rally in bank stocks has led many in the City to start talking excitedly about whether the worst of the credit crunch is now behind us. But is this true?

If you had invested in bank stocks a couple of weeks ago in the wake of the Bear Stearns crash, you would now be sitting on such a healthy profit you could be tempted to bank your winnings and go and sit on a beach for the rest of the year. UK bank stocks are up 16% in two weeks.

The euphoria that has greeted this latest rally has led many in the City to start talking excitedly about whether the worst of the credit crunch is now behind us. The US authorities have signalled they will do whatever it takes to prevent this turning into a systemic crisis. You can't fight the Fed, as the saying goes.

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Simon Nixon

Simon is the chief leader writer and columnist at The Times and previous to that, he was at The Wall Street Journal for 9 years as the chief European commentator. Simon also wrote for Reuters Breakingviews as the Executive Editor earlier in his career. Simon covers personal finance topics such as property, the economy and other areas for example stockmarkets and funds.