by Diana Mandia
(Reuters) – European stocks ended higher on Monday, supported by the recovery of the banking sector during the session thanks to cheap buybacks and comments deemed reassuring by supervisors in the European Union.
In Paris, the CAC 40 ended up 1.27% at 7,013.14 points after losing up to 1.9% earlier in the day.
The British Footsie gained 0.93% and the German Dax 1.12%.
The EuroStoxx 50 index advanced 1.29%, the FTSEurofirst 300 1.03% and the Stoxx 600 1.03%.
The emergency rescue orchestrated on Sunday by Credit Suisse, acquired by UBS, sparked a wave of concern in European markets.
The decision of the Swiss authorities to favor the shareholders of Credit Suisse before the holders of bonds called AT1 (“Additional Tier 1”) or CoCo (“contingent convertible”), in particular alarmed investors, accustomed to losses being d initially borne by the shareholders.
“AT1s are currently suffering from a major crisis of confidence,” said Marco Pabst, chief investment officer at Arbion.
In this context, the EU supervisory authorities reiterated in a joint statement their recommendation to have the losses absorbed by the shareholders first, which somewhat calmed the nervousness around the banking sector.
In addition, the main central banks promised over the past weekend, in a coordinated action, to provide liquidity in dollars to stabilize the financial system.
VALUES
Still reeling on Monday, the Stoxx banking index turned higher in session and ended with a gain of 1.21%, after falling 6% at the start of the day.
Credit Suisse shares had another difficult day after the announcement of the takeover by UBS, with a plunge of 55.7%. UBS, meanwhile, ended up 1.26%.
In Paris, Credit Agricole and BNP Paribas ended up 0.66% and 1.70% respectively after a difficult start to the session. Societe Generale lost 0.82%.
At the top of the CAC 40, Thales advanced by 3.72% supported by an increase in the recommendation of JPMorgan to “outperform” against “neutral” previously.
AT WALL STREET
At the time of the close in Europe, the equity indices were moving in the green thanks, again, to the rise in banking stocks, before the Federal Reserve’s monetary policy decision expected on Wednesday evening.
The Dow Jones gained 1.12%, the Standard & Poor’s 500 0.73% and the Nasdaq 0.06%.
THE INDICATORS OF THE DAY
In France, economic growth looks stronger than expected this year, and inflation a little less painful than expected, as the shock caused by energy prices begins to subside, the Banque de France said on Monday. France, which forecasts growth of 0.6% in 2023 for the second largest economy in the euro zone, an improvement on its previous forecast of 0.3%.
The Bundesbank said on Monday that the German economy is expected to contract in the first quarter and the high level of underlying inflation will persist even though the overall rise in prices should soon slow markedly.
CHANGES
The “dollar index”, which measures the variations of the greenback against a basket of currencies, lost 0.34% with the easing of tensions in the markets which keeps operators away from assets deemed the safest.
The euro took the opportunity to gain 0.49% to 1.0722 dollars.
RATE
Yields on Treasuries were moving sharply higher on Monday as the Credit Suisse takeover and central bank moves to bolster liquidity helped ease investor concerns, pending Fed rate decisions. .
The two-year US Treasury yield, the most interest-rate sensitive, gains more than 13 basis points to 3.9805%, while the 10-year yield rises ten basis points to over 3.5 %.
In Europe, the two-year rate on German government bonds fell to 2.374% after falling to 2.089% earlier in the session.
That of the ten-year debt ended almost unchanged, at 2.128% after a trough at 1.923%.
OIL
Oil prices are stabilizing after falling to their lowest level in 15 months on Monday.
Brent is stable around 73.08 dollars a barrel and American light crude (West Texas Intermediate, WTI) is also unchanged around 66.80 dollars.
TO FOLLOW TUESDAY:
(Edited by Blandine Hénault)
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