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NEW YORK (awp international) – The emergency takeover of the major Swiss bank Credit Suisse (CS) by its competitor UBS also triggered relief among investors on the US stock exchanges on Monday. Most of Friday’s losses on Wall Street and the Nasdaq stock exchanges have been recouped.
An agreement between six leading central banks, including the US Federal Reserve and the European Central Bank (ECB), also helped. From now on, US dollar transactions with a seven-day term will be carried out daily, since the supply of the world reserve currency, the dollar, is particularly important for the international business of large financial institutions. This is especially true in troubled times.
The Dow Jones Industrial increased by 1.20 percent to 32,244.58 points. On Friday, the best-known Wall Street index recorded a slight weekly minus after significant losses. The market-wide S&P 500 rose 0.89 percent to 3951.57 points on Monday. On the Nasdaq technology exchange, the Nasdaq 100 selection index rose by a more moderate 0.34 percent to 12,562.61 points. He had recovered more significantly in the past week.
Despite the relief, global markets strategists at US bank JPMorgan remain cautious. “There are decades where nothing happens and there are weeks where decades happen,” they headlined a study. They referred to the recent bank closures in the USA and the forced marriage of the big banks in Switzerland. They recalled the interest rate move by the ECB on Thursday and are waiting for the Fed’s interest rate decision on Wednesday.
They also highlighted events such as China’s mediation in the Middle East and President Xi Jinping’s visit to Russia, warning of the “possibility of a Minsky moment” in markets and geopolitically. What is meant by this is a sudden collapse of assets after a long upswing, caused by debt-financed speculative bubbles. “Even if central banks manage to contain the contagion, credit conditions are likely to tighten at a faster rate due to pressure from markets and regulators,” they wrote.
Among industries in the US, financials were back in demand after falling sharply over the past two weeks. Among the big banks, JPMorgan in the Dow was up 1.1 percent and Goldman Sachs was up 2.0 percent. Papers from other financial institutions, such as the Bank of New York Mellon or Capital One Financial, also rose more significantly again.
The trigger for the sell-off at the beginning of March was the liquidation of the US financial group Silvergate Capital, which is geared towards the crypto industry. A few days later, the US money house Silicon Valley Bank (SVB), which specializes in start-up financing, was placed under the control of the US deposit insurance company FDIC and closed. The Signature Bank was then closed.
The First Republic Bank is also badly hit. Shares in the regional bank fell to a record low, ending the day down another 47 percent. A second downgrading of creditworthiness within a few days had a negative impact. As the rating agency Standard & Poor’s explained, the bank’s problems have not yet been solved even with the promise of 30 billion dollars by a number of large US banks.
The papers of the New York Community Bancorp, on the other hand, jumped almost 32 percent. It takes over parts of the Signature Bank.
Aside from bank stocks, Foot Locker stocks also caught the eye. After a quarterly report that turned out stronger than expected and statements about medium- to long-term financial targets that were met with disappointment, the shares went on a steep roller coaster ride. After a price increase of around eleven percent, the papers of the sporting goods retail chain ultimately lost 5.7 percent.
The euro was trading at $1.0722 at the close on Wall Street. The ECB had set the reference rate in Frankfurt at 1.0717 (Friday: 1.0623) dollars. The dollar thus cost 0.9331 (0.9414) euros. On the US bond market, the futures contract for ten-year bonds (T-Note Future) fell by 0.70 percent to 115.00 points. In return, the yield on ten-year government bonds rose to 3.488 percent./ck/jha/
— By Claudia Müller, dpa-AFX —
