(Photo: The Canadian Press)
MARKET REVIEWS. Global markets plunged on Monday morning after rival UBS took over Credit Suisse, ahead of a meeting of the US Federal Reserve and as fears of a global banking crisis remain high.
Stock indices at 7:41 a.m.
Paris tumbled by 1.2%, Frankfurt by 1.4% and London by 1.6% at the start of the session in Europe. The Swiss stock market index collapsed by 1.8%.
In New York, before the opening of the markets, the Dow Jones average of industrial stocks fell by 0.4% and the broader S&P 500 index by 0.2%.
In Asia, the Nikkei 225 lost 1.4% in Tokyo. The Shanghai Stock Exchange slipped 0.5% and the Hang Seng 2.7% in Hong Kong. Sydney lost 1.4% and Seoul 0.7%.
On the New York Commodities Exchange, the price of oil fell US$2.45 to US$64.29 per bari
Paris fell by 1.2%, Frankfurt 1.4% and London 1.6% at the start of the session in Europe. The index of the swiss stock market collapsed by 1.8%.
In New York, before the markets open, the average Dow Jones of industrial stocks was down 0.4% and the broader index S&P 500 of 0.2%.
In Asia, the Nikkei 225 lost 1.4% in Tokyo. The scholarship of Shanghai slipped 0.5% and the Hang Seng 2.7% in Hong Kong. Sydney lost 1.4% and Seoul 0,7 %.
On the New York Commodity Exchange, the price of oil was down US$2.45 to US$64.29 a barrel.
The context
The financial sector is still suffering: European banks fall by 1.57% in the European index Eurostoxx 600with in particular -4.29% for BNP Paribas (BNP)-5,13% pour IN (INGA) and -2.34% for Deutsche Bank (DBK).
The action of Credit Suisse (DBK) collapsed nearly 60%, and was worth less than the takeover offer from rival UBS, which also lost 3.5% around 10:55 GMT.
“Investors are still struggling to assess the situation of financial stocks” and remain suspended from the US Federal Reserve meeting on Tuesday and Wednesday, comments Pierre Veyret, analyst at ActivTrades.
As a sign of the persistent feverishness, investors are falling back on all values considered to be safe havens, notably gold and the sovereign debt market.
After intense negotiations this weekend, the first Swiss banking group UBS agreed on Sunday to buy for a pittance its ailing rival Credit Suisse, with important guarantees from the government of Bern and cash from the BNSthe country’s central bank.
The amount of the takeover of Credit Suisse, which has been going through an intense phase of turbulence since the beginning of last week, amounts to 3 billion Swiss francs (3.02 billion euros) for a bank which was worth almost triple Friday at the close of trading.
To calm banking stress, official statements have been made: “the European banking sector is resilient, with solid levels of capital and liquidity”, the European Central Bank said on Monday in a joint statement with the European Banking Resolution Mechanism ( SRB) and the European Banking Authority (EBA).
German banking supervisor Bafin reiterated that the national financial system is “stable and robust”.
What do they know?
On Sunday, the central banks of the United States (Fed), Europe, Switzerland, England, Canada and Japan announced that they were carrying out coordinated action to improve access to liquidity, an exceptional measure to restore confidence in the financial system, shaken for ten days by the bankruptcy of the American establishment Silicon Valley Bank (SVB).
But “the more policymakers act, the more bad news investors expect, which creates a horribly negative feedback loop, as if investors are asking themselves, ‘what do they know that we don’t know?’»estime Stephen Innes de SPI Asset Management.
In the bond market, short-term yields continued to fall sharply, signaling that investors believe the Fed will not raise rates Wednesday at its next meeting.
“If it continues to raise rates, it strengthens its anti-inflationary credibility, but risks increasing financial tensions,” said Xavier Chapard at LBPAM.
Gold above $2,000 an ounce
Propelled by mounting concerns over the banking sector, the price ofor crossed the symbolic threshold of 2,000 dollars an ounce on Monday morning. Around 10:30 GMT, the yellow metal crumbled 0.16% to $1,985.
L’euro climbed 0.14% against the dollar, to 1.068 5 to the dollar.
The natural gas European market slipped below 40 euros per megawatt hour (MWh) on Monday, its lowest since July 2021, held back by mild weather and high storage levels.
