Fears over the health of the financial sector shook stock markets again this week. Another discount of banks, a sharp increase in the value of the dollar, and the resulting decline in commodity prices and the following exchange rates of industry companies meant that over 75 percent of share prices of entities from the main market were overestimated.
Trading was expected to take place in a calmer atmosphere on Wednesday as tensions in the US banking sector and US inflation data refocused the market-priced scenario for the Federal Reserve’s monetary policy.
Unfortunately, the attention from the US shifted to Europe and concerns about the condition of Credit Suisse, a bank of a completely different importance to the global financial system than SVB, which is irrelevant from this point of view. At the end of 2022, the assets of the Swiss giant amounted to over CHF 633 billion.
The situation may turn out to be a stalemate and as Nouriel Roubini of Roubini Global Economics consultancy said, Credit Susisse is “too big to fail and too big to save” – quoted Bloomberg.
The capital quickly began to choose safe havens, focusing mainly on the dollar, which quickly gained up to 2% on a pair with the euro, gold grew by 1.2%, but the prices of commodities such as crude oil (-5%) and copper (-5%) fell 3.2 percent).
As a result, the fatal sentiment dominated trade in Europe, where the DAX lost around 2.7 percent. and on the Warsaw Stock Exchange, where all main and sector indices fell significantly. Thus, data on Poland’s record CPI inflation in February receded into the background, although they could not have escaped attention, with the interest rate hike stopped many months ago. Again, the subject of taxes on extraordinary profits or the extension of credit holidays could additionally scare investors of Polish companies.
The WIG20 fell by 2.73 percent, and at times it was only 2.2 points apart. to break the barrier of 1700 pts. WIG fell by 2.64 percent, while mWIG40 fell by 2.91 percent. and sWIG80 by 2.24 percent. Turnover exceeded PLN 1.25 billion, of which PLN 1.05 billion related to WIG20.
Heavyweight sectors from the WSE, where the turnover was the highest, were under the line. Mining fell by 6.11 percent, fuels lost 5.37 percent. and banks 3.03 percent. Trade on them exceeded PLN 168 million, PLN 198 million and PLN 336 million, respectively. However, all industry indices fell. In total, it was below the line, for the second time this week it was 70 percent. share prices of the main market, and less than 18 percent. it went up.
In WIG20, the stocks of state-controlled companies from the above “heavy” industries lost the most. JSW’s share price fell by 6.9 percent, while Pekao fell by 3.02 percent. KGHM by 5.98 percent, Orlen by 5.46 percent, and PKO BP by 2.98 percent. The rates of mBank (-2.92 percent) and Kruk (-3.49 percent) seemed to strongly transfer tensions from the financial sector, completely unlike Santander shares, which fell “only” by 0.64 percent, as the only the shares of Grupa Kęty (5.57%) and Asseco (0.47%) went up.
In addition to mainstream events, there have been further reports on the market about the work of the Ministry of Finance on the scope and method of implementing the EU solution regarding the so-called solidarity levy on excess profits in the area of energy policy. This aspect is particularly important from the point of view of companies such as JSW and PKN Orlen or mWIG40-listed Bogdanka (-8.01%) and Bumech (-4.93%).
As the Minister of Climate and Environment Anna Moscow informed, “work on the excess profits tax is currently focused more on the analysis of the results of the coal and fuel sectors than on specific solutions.”
Apart from mining companies, the segment of medium-sized companies is strong
the share prices of Alior (-5.48%), ZEPAK (-5.79%), Polenergia (-5.51%) and Millennium (-4.86%) fell. However, the declines in other companies were also deep and wide. Only the shares of Mobruk (0.16 percent), STS (0.52 percent) and DataWalk (3 percent) were listed higher. DomDev’s share price was neutral (0.0%).
The Sfinks price stood out on the broad market, gaining 19.57% after the initial results. and stands out this year with the highest rate of return on the entire WSE, which already exceeds 200%.
In Europe, the discount was even greater and, apart from the aforementioned DAX, the CAC40 fell by 3.3 percent, the Italian FTSE MIB by 4.3 percent. Spanish IBEX by 3.8 percent, British FTSE100 by 3.6 percent. Stoxx Banks’ EURO sector index fell more than 7.7 percent. with a Societe Generale discount of over 11%. or Deutsche Bank by over 9 percent. after At 5 p.m. in the US, the S&P 500 fell 1.5 percent, the Dow Jones Industrial fell 1.8 percent, and the Nasdaq Comp. lost 0.85 percent.
