Markets: Stocks flat as bank deal gets mixed response

Many had predicted that a putative deal with US regulators over allegations of improper foreclosures during the financial crisis would lift banks, but the official announcement of the $40bn deal was in the end met with a mixed response.

It is not that the deal is not good for banks. The five major lenders will between them take a $25bn hit in mortgage principal writedowns, but the majority of this is covered by existing reserves and it is expected that there will be no balance sheet impact, at least in the short term.

But with fears over Greece high and stocks across the sector already high off the back of a recent rally, trading overnight was flat in spite of the seemingly positive news. Bank of America was up 0.6 per cent, while JP Morgan and Citigroup fell 1.2 per cent and 1.6 per cent respectively.

The S&P 500 was up by 0.2 per cent as it gained two points to 1,352, while the Dow Jones Industrial Average added 0.1 per cent as it rose by seven points to 12,890. The Nasdaq Composite enjoyed a stronger bounce, adding 0.4 per cent and 11 points to 2,927.