US measures to reassure the stability of the banking system after several bankruptcies allow Wall Street to stabilize Monday, without convincing in Europe, where the markets ended in sharp decline, weighed down by the financial sector.
After an opening at half mast and two sessions of strong decline, Wall Street was stable around 5:10 p.m. GMT, after attempting a stronger rebound: the Dow Jones lost 0.18%, the S
European markets picked up a few colors from their lows at the start of the afternoon, but ended down sharply: the CAC 40 lost 2.90% in Paris, the Dax in Frankfurt 3.04% to finish under 15,000 points and the FTSE 100 in London dropped 2.58%, while the Milan Stock Exchange ended down 4.03%.
Investors rushed to the debt market, perceived as safe haven investments in the event of a crisis: certain government securities, in particular the short-term debt of the United States, posted historic declines.
Investors remain feverish and prices volatile despite the efforts of the American authorities to avoid contagion after the failure of three American banks.
Americans can “have confidence” in a “sound” banking system, President Joe Biden said, assuring that he would do “whatever is necessary” to keep it that way.
On Sunday, the authorities had already announced that the deposits of the bankrupt bank Silicon Valley Bank (SVB) would be guaranteed in their entirety and the United States Federal Reserve (Fed) pledged to lend the necessary funds to other banks to honor withdrawal requests.
“It’s not a federal bailout, but it provides guarantees,” says IG analyst Alexandre Baradez.
Confidence in American regional banks nevertheless seems broken and “only the big banks seem safe,” Lionel Melka, partner at Swann Capital, told AFP.
The Californian bank First Republic plunged 63% and the Western Alliance 57%. The big banks held up better: Bank of America lost 2.82%, Goldman Sachs 2.15% and Morgan Stanley 1.67%.
Bright red for European banks
On Friday, European banking stocks fell again on Monday, with an even more marked movement for banks perceived as less solid: the German Commerzbank unscrewed by 12.71%, while Credit Suisse dropped 9.58% . The French BNP Paribas and Société Générale fell by 6.80% and 6.23% and the Italian Unicredit by 8.49%.
In London, the banking giant HSBC, which bought the British branch of Silicon Valley Bank (SVB) on Monday for a symbolic pound, lost 4.13% to 568.10 pence. Standard Chartered (-6.89% to 688.80 pence) and Barclays (-6.31% to 147.48 pence) also suffered.
Falling dollar
Faced with this crisis in the banking sector, “investors have completely reassessed their expectations of rate hikes” from the Fed, explains Quentin Doulcet, analyst at Myria AM.
“It is therefore doubtful that the pace of restrictive monetary policy can be maintained at this high rate,” confirms Konstantin Oldenburger of CMC Markets.
Markets are now pricing in a slower pace of Fed rate hikes at the next meeting on March 21-22.
In Europe, “it is difficult to see why the ECB would not achieve the planned increase of 50 basis points”, but the doves, supporters of an accommodating monetary policy, have “more arguments” for the future, estimates Carsten Brzeski, economist at ING.
Sovereign rates fell on the bond market on Monday. The interest rate for the 10-year US loan was 3.51%, against 3.70% on Friday at the close, while the two-year rate experienced an unprecedented drop since 2008, of nearly 50 points. basis at 4.12%.
The dollar fell against other currencies: the euro recovered 0.89% to 1.0738 dollars and the pound 1.06% to 1.2157 dollars.
Bitcoin soared 12% to $24,100 on hopes of looser monetary conditions and a weaker dollar.
03/13/2023 18:29:23 – Paris (AFP) – © 2023 AFP
