PARIS (Reuters) – European stock markets ended lower on Friday and Wall Street was also in the red at the end of the morning in New York in a new bout of fever in the financial markets, particularly in the banking sector, while the session, volatile, was marked by the “four witches”, the expiration of several futures contracts.
In Paris, the CAC 40 ended down 1.43% at 6,925.4 points in large volumes with a high in the session at 7,104.75 points and a low at 6,895.73 points. The British Footsie fell by 1.01% and the German Dax by 1.33%.
The EuroStoxx 50 index fell 1.26%, the FTSEurofirst 300 1.22% and the Stoxx 600 1.21%.
Over the week as a whole, the CAC 40 lost 4.08% and the Stoxx 600 3.85%, in a climate of mistrust vis-à-vis the banking sector since the rout of regional banks at the end of last week. Americans Silicon Valley Bank (SVB) and Signature Bank, then in the middle of this week Credit Suisse.
Far from reassuring, the aid of 30 billion dollars provided by the major American banks to the regional bank First Republic Bank, victim of a crisis of confidence among investors and customers, rekindled panic on the markets on Friday.
Investors now fear a deep liquidity crisis for US regional banks and the impact of a Credit Suisse insolvency as US banks have requested a total of $153 billion in liquidity from the US Federal Reserve (Fed). emergency in recent days, an amount greater than that released at the height of the 2008 financial crisis.
This reflects “funding and liquidity tensions on banks, due to the weakening of depositor confidence”, commented the rating agency Moody’s, which lowered its outlook on the American banking system to negative this week.
Gathered in an unscheduled summit, European Central Bank (ECB) supervisors, however, said on Friday that they did not see any contagion from the current turmoil to eurozone banks, according to a source, while the governor of the Banque de France, François Villeroy de Galhau, assured that the 50-point rate hike decided by the ECB on Thursday was a message of confidence in the banks.
“Despite all the measures taken by the Fed, the Treasury, the BoE, the SNB and the American banks to stabilize the situation this week, the distress of the markets persists”, summed up Craig Erlam, market analyst at OANDA.
Four Witches Day, the third Friday in March, further heightened volatility in the markets with high trading volumes. The US Vix index jumped 9.26% to 25.12 points and its European equivalent ended up 12.7% to 30.03 points.
VALUES IN EUROPE
Virtually no major compartment of the European stock market has escaped risk aversion. The banking index (-2.57%) posted the largest sectoral decline, also registering a decline of 11.53% over the whole week.
French banks BNP Paribas and Crédit Agricole fell by 1.95% and -2.29% respectively, while elsewhere in Europe, Credit Suisse fell by 8.01%, Santander by 4.64%, HSBC by 2 .86% and Commerbank by 3.47%.
A WALL STREET
At the close in Europe, the Dow Jones fell 1.11%, the Standard & Poor’s 500 1.04% and the Nasdaq 0.76%, with most sectors in the red.
The finance compartment lost 3.02% and that of the banks 4.21% with the plunge of 26.88% from First Republic, 16.15% from PacWest Bancorp and 18.34% from Western Alliance.
The big American banks, JPMorgan, Citigroup and Wells Fargo fell from 2.94% to 3.63%.
In a tense context on the markets, Fedex stands out with a jump of 8.27% thanks to an increase in its annual profit forecast.
THE INDICATORS OF THE DAY
The OECD raised its forecast for global GDP growth to 2.6% this year and 2.9% in 2024 but stressed that the economy remained fragile.
Eurozone inflation was confirmed at 8.5% in February by Eurostat.
US household sentiment has deteriorated unexpectedly since the start of March, according to initial survey results from the University of Michigan, while industrial production in the United States posted zero growth in February after a contraction of 0.2% the previous month.
RATES In a volatile market, the flight to safe-haven assets led to lower bond yields.
The German two-year ended down around 13 basis points, at 2.43%, and the ten-year, which fell in session to its lowest since early February, ended down almost 12 points, at 2. 12%. Over the week as a whole, with a drop of 41 points, it recorded its biggest fall since 1987 when it was still at 2.77% at the start of the month.
In the United States, yields on ten-year and two-year Treasuries each fell by around 16 points to 3.41% and 3.96% respectively.
EXCHANGES The dollar fell 0.5% against a basket of benchmark currencies, with some currency traders fearing a recession in the event of an error by the Fed, which meets next week. US President Joe Biden has also asked Congress to strengthen the power of banking regulators.
The euro rose to 1.0665 dollars (+0.57%).
OIL
Oil prices, which could lose more than 10% over the week as a whole, are heading for their biggest weekly drop amid fears over the banking sector.
Brent lost 2.52% to 72.82 dollars a barrel on Friday and American light crude (West Texas Intermediate, WTI) 2.6% to 66.57 dollars.
METALS
The banking shock supported gold, a safe haven, which gained 2.32% to 1,963.69 dollars an ounce, heading for its best weekly performance in four months.
(Written by Claude Chendjou, edited by Jean-Stéphane Brosse)
