by Laetitia Volga

PARIS (Reuters) – European stock markets are expected to rise on Friday after a turbulent week in which fear of a banking crisis sent the sector plunging while central bank rate expectations were lowered.

The first indications available give an increase of 0.39% for the Parisian CAC 40, 0.16% for the Dax in Frankfurt, 0.68% for the FTSE in London and 0.39% for the EuroStoxx 50 .

The broad European Stoxx 600 index lost nearly 2.7% over the first four sessions of the week, as did the CAC 40, due to fears for the global banking system following the fall of several American institutions and Credit Suisse’s setbacks.

The financial support provided to the Swiss bank for the Swiss central bank helped ease tensions on Thursday. In the same vein, 11 American banks, including JPMorgan, have agreed to inject $30 billion into the coffers of First Republic Bank, on the verge of collapse, to avoid a domino effect after the bankruptcy of SVB, Silvergate and Signature. .

The European Central Bank, which opted for a half-point rate hike on Thursday, was reassuring by explaining that banks in the euro zone were solid and that the rise in interest rates should strengthen their margins. .

Euribor futures, a barometer of market expectations, suggest investors have fully priced in a quarter-point rise at the next meeting in May.

Goldman Sachs now sees the deposit rate peaking at 3.5%, down from 3.75% in its previous forecast.

Markets are also starting to bet on a Fed rate hike of 25 basis points again next week, although the probability of a status quo is estimated at 20%.

AT WALL STREET

The New York Stock Exchange is expected close to equilibrium the day after a positive session, driven by the sharp rebound in the financial sector after a group of large banks decided to rescue First Republic Bank.

The Dow Jones index gained 1.17%, or 371.98 points, to 32,246.55 points on Thursday, the S&P-500 gained 68.35 points, or 1.76%, to 3,960.28 points and the Nasdaq Composite advanced 283.23 points (2.48%) to 11,717.28 points.

The S&P-500 banking index gained 2.16%.

The action of First Republic Bank closed up 10% but fell 17% in after-market trading following in particular an announced suspension of the dividend.

Meta Platforms (+3.63%), Facebook’s parent company, and Snap (+7.25%) rose after the US administration threatened to sanction TikTok.

IN ASIA

Driven by banking and electronic stocks, the Nikkei index on the Tokyo Stock Exchange gained 1.2%.

In the wake of global markets, the CSI 300 index of large caps in mainland China is granted 0.88% and the Shanghai SSE Composite 1.03%.

EXCHANGES/RATES

The dollar is down against other major currencies (-0.32%), including the euro, which is down to 1.0646.

As for government bonds, the yield on ten-year US Treasury bonds fell slightly to 3.5525%.

OIL

Oil prices took more than 1% on profit taking after the sharp fall that followed fears for the banking sector.

Brent gained 0.64% to 75.18 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.66% to 68.8 dollars.

(Laetitia Volga, editing by Kate Entringer)

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