by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to see slight variations on Tuesday, in a context of caution after the shock wave caused by the bankruptcy of the American bank SVB while the imminence of the publication of the monthly figures of the US inflation hardly encourages risk taking.

Futures contracts on indices suggest an increase of 0.04% for the CAC 40 in Paris and 0.01% for the Dax in Frankfurt. The FTSE 100 in London, on the other hand, should decline by 0.25% and the EuroStoxx 50 by 0.15%.

Main macroeconomic meeting of the week in the United States, the inflation figures for the month of February will be published at 12:30 GMT. The Reuters consensus forecasts a slowdown to 0.4% over one month and a deceleration to 6.0% over one year after +0.5% and +6.4% respectively.

Waiting for the publication of this data could increase volatility in the markets as the index, a barometer of fear, jumped the day before in session above 30 points, a peak since October. The market has been nervous since Friday’s announcement of the closure of SVB Financial Group, which operates as Silicon Valley Bank (SVB).

This closure was followed by that of another bank in New York, Signature Bank, and before that of Silvergate Capital, resulting in strong mistrust, particularly with regard to regional banks and, to a lesser extent, with regard to the entire financial system.

Since then, from US President Joe Biden to the Federal Reserve (Fed), everyone has been working to reassure bank customers about their deposits, the low risk of contagion, and the soundness of the prudential framework.

“The threat of systemic disruption to the banking system is low, but the risk of fueling financial instability may well encourage the Fed to opt for a lower rate hike at its next meeting,” predicts economist Bob Schwartz. at Oxford Economics.

Like him, many analysts believe that in view of the rout of SVB, the Fed will be forced to limit the rise in its rates to 25 basis points at the end of its meeting next week so as not to further frighten the market. Goldman Sachs is even counting on a status quo on the cost of credit.

In the euro zone, the European Central Bank (ECB) will meet on Thursday and the money markets are still expecting an increase in the cost of money by 50 basis points.

AT WALL STREET

The New York Stock Exchange ended in dispersed order on Monday, still penalized by banking stocks, but certain sectors benefited from the prospect of a less aggressive Fed on its interest rates.

The Dow Jones Industrial Average fell 0.31 percent, or 99.77 points, to 31,809.87 points. The broader Standard & Poor’s 500 lost 6.62 points, or 0.17% to 3,854.97 points. The Nasdaq Composite advanced for its part by 49.96 points (+0.44%) to 11,187.56.

The banking arm of the S&P index lost 7%, its biggest single-session drop since June 2020.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index ended down 2.19% at 27,222.04 points and the wider Topix fell 2.67% at 1,947.54 points.

In China, the Shanghai SSE Composite lost 0.72% and the CSI 300 lost 0.6%.

CHANGES

The dollar rallied slightly higher on Tuesday, 0.27% against a basket of benchmark currencies after falling 0.9% on Monday to a one-month low ahead of a break in rates from the Fed.

The euro is trading at 1.0681 dollars (-0.45%).

RATE

The yield on two-year U.S. Treasuries is flat at 4.00% after falling 60 basis points on Monday, the biggest drop since October 1987.

In Europe, the yield on the German Bund at two lost around two basis points to 2.46%.

OIL

Oil prices are still penalized by fears of a new financial crisis and the wait for US inflation data: Brent fell 0.93% to 80.02 dollars a barrel and US light crude (West Texas Intermediate , WTI) 1.07% to $74.00.

METALS

The price of gold is back from a peak of more than five weeks touched on Monday, but is now above 1,900 dollars an ounce. A safe haven, gold benefited from the rout of American regional banks.

Around 07:40 GMT, gold is displayed at 1,911.38 dollars (-0.1%).

(Written by Claude Chendjou, edited by Tangi Salaün)

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