European Bank Stress Test will be announced today .... Which way will markets go ?

A bank fails the test if its Tier-1 capital ratio is below 6 percent under two scenarios: adverse scenario and adverse scenario plus sovereign risk.

The stress tests will show a failing mark for some of the German state banks and the Spanish savings banks (ones that the street already knows are poorly capitalized) . Some bigger banks will raise capital. A question this report likely has not answered is how much exposure each bank has to each nation’s debt. They may lump some things together to obscure bad news.
Will this instill confidence in the banks? Short term, yes. Longer term, no.