(News Bulletin 247) – The New York Stock Exchange is expected to fall again on Friday morning the day after a sharp rebound prompted by the announcement of the rescue plan for the Californian bank First Republic.
The ‘futures’ on indices signal for the moment an opening of Wall Street down 0.8% for the Dow Jones and 0.3% for the Nasdaq, which could cause them to lose their meager weekly gains.
US equity markets had a tough week due to the failure of a series of US regional banks, led by SVB, against a backdrop of massive withdrawals of deposits.
The US Federal Reserve has therefore had to step up its interventions in recent days in an attempt to limit the impact of SVB’s bankruptcy.
Latest episode to date, First Republic Bank announced Thursday evening that it would benefit from 30 billion dollars of uninsured deposits from 11 large American banks, an injection of liquidity that the Californian bank hails as a testimony of ‘confidence ‘.
In the wake of this announcement, Wall Street signed a strong rebound last night, the Dow Jones having recovered 1.2% and the Nasdaq Composite having soared by almost 2.5%.
But concerns are not ready to subside as the major central banks are now engaged in a cycle of monetary tightening, the long-term repercussions of which have yet to be determined.
“We should not raise key rates if a financial crisis threatens,” asserts Bruno Cavalier, chief economist at Oddo BHF.
‘It is premature to conclude that global financial stability is threatened, but when in doubt, central banks would be well advised to be more cautious in the short term,’ said the analyst.
After a start to the session in the green, European markets turned down on Friday, again pulled down by banking stocks, including the STOXX Europe 600 Banks sector index yielding 1.7%.
A new manifestation of the damage caused by these still-living fears, the Credit Suisse share price dropped nearly 10% on the Zurich Stock Exchange.
In this context, the dollar, now weakened by the uncertainties surrounding the Fed’s next decisions, is losing ground again, particularly against the yen and the pound sterling.
For its part, the euro rose 0.15% against the dollar to nearly 1.0630 in reaction to the rate hike of 50 basis points by the European Central Bank (ECB).
Gold, meanwhile, continues to benefit from its status as a safe haven to head for new all-time highs, with a gain of 1.4% to 1949.5 dollars an ounce.
The trend in rates confirms that market operators are turning to safe havens since the yield on 10-year Treasuries continues to fall towards 3.45%.
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