(News Bulletin 247) – While the market had its eyes riveted on the monthly federal employment report at the end of last week, it was a surprise event that took trading rooms by surprise, plunged the space of moment, in very bad memories dating back to 2008.
Silicon Valley Bank (SVB), a banking institution specializing in financing technology companies, is suffering. According to Reuters, SVB is the banking partner of nearly half of US venture-backed start-ups that went public in 2022. This establishment had to urgently sell $21 billion of debt securities, which put it on the market. led to a loss of 1.8 billion dollars and its parent company, SVB Financial Group, was forced to carry out an emergency capital increase of 2.25 billion dollars.
The regulator immediately reacted by placing the establishment under its control, and the Fed specified that it would lend the necessary sums to requests for withdrawal from customers of other banks, to eliminate the risk of a “bank run”. Another weakened establishment, Signature Bank, was automatically closed by the regulatory authorities.
In France, the consequences on the quotations of bank securities were palpable. Over the whole of the past week, Societe Generale will have fallen by 5.20% to 25.52 euros, and BNP-Paribas by 6.24% to 60.25 euros. The CAC 40 will have lost 1.73%.
In this tense atmosphere to say the least, the markets took note of the statistical highlight of the week, namely the federal report on US employment (NFP report, for Non Farm Payrolls). The report, particularly awaited after the 217,000 job creations in January (revised to 504,000) highlighted 311,000 new creations in the private sector (excluding agriculture) in February, significantly above expectations. A relief is however noticeable concerning the dynamics of wages (+0.2%) and the progression of the unemployment rate to 3.6% of the active population (target however stable at 3.4%).
The market had also already been cooled in the first part of the week by the half-yearly hearing of J Powell before the Parliamentarians, adopting a hawkish tone. “Jerome Powell held a rather offensive speech on the question of inflation. The Fed could thus raise its rates again by movements of 50 basis points if the data justify it. On the other hand, he confirmed the need to maintain high rates for an extended period and that the final rate of the current cycle could exceed the 5.25% mentioned in the forecasts of last December”, summarize the strategists of Lazard Frères Gestion.
On the other side of the Atlantic, the main equity indices had another difficult session on Friday, like the Dow Jones (-1.07% to 31,909 points), or the Nasdaq Composite (-1 .76% at 11,138 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, fell 1.45% to 3,861 points.
A point on the other risky asset classes: around 08:00 this morning on the foreign exchange market, the single currency was trading at a level close to $1.0720. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $77.00.
To be followed in priority on the macroeconomic agenda this Monday, the meeting of the Eurogroup, informal meeting of the Ministers of Finance of the Member States of the Euro Zone.
KEY GRAPHIC ELEMENTS
The plot of a marked bearish engulfing candle, in weekly view, at the top of the trend, on resistance levels (historical highs), militates at least for a corrective readjustment, the first phase of the entry into wide consolidation above 7,000 symbolic points. Note also, in daily view, the very clear break in the 20-day moving average (in dark blue). The RSI oscillatory is in full navigation from one terminal to another.
FORECAST
In view of the key graphic factors that we have mentioned, our opinion is negative on the CAC 40 index in the short term.
This bearish scenario is valid as long as the CAC 40 index is trading below the resistance at 7422.00 points.
The News Bulletin 247 board
Hourly data chart
Chart in daily data
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I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
