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With Credit Suisse's rebound, optimism is back in European markets

2023-03-16T10:07:18.646Z


The efforts made by the Swiss central bank and the announcements by Credit Suisse have finally put an end to the wave of panic on the financial markets.


Optimism returned to European markets on Thursday as investors appeared to appreciate efforts by the Swiss central bank and announcements from Credit Suisse to restore confidence.

Around 8:35 a.m., the European stock markets recovered by 1.43% in Paris, 1.26% in Frankfurt, 1.27% in London and 1.21% in Milan, after their plunge the day before.

However, the session in Europe could be volatile until the publication in the early afternoon of the press release from the European Central Bank (ECB), which must decide on a further rate hike of half a point to combat inflation, but who could be tempted to soften his posture to give the banks a breath of fresh air.

Since the collapse of several US regional banks last week, nervousness has spread to financial markets.

Reassured during a session on Tuesday about the soundness of the banking system, they were completely destabilized on Wednesday by Credit Suisse, whose stock suffered the worst fall in its history (almost 25% at the close).

Banking stocks came under attack, oil prices plunged and investors took shelter in risky assets, these developments rekindling the nightmare of the 2008 global financial crisis. Europe folded, but Wall Street limited damage after the intervention of the Swiss authorities to rescue the Swiss banking giant.

The Swiss National Bank (SNB) said it was ready to make liquidity available to the Zurich bank "

if needed

" and Credit Suisse announced overnight that it would borrow up to 50 billion in the short term. Swiss francs (50.7 billion euros) to the SNB to "

strengthen

".

Faced with this banking tumult, the task of the ECB looks complicated, caught between its fight against inflation, which remains high, and the prevention of banking risk.

Visibility regarding the monetary policies of the major central banks is greatly reduced by banking stress and it is difficult to predict what weight policymakers will give to this banking stress compared to inflation,” observes Ipek Ozkardeskaya, analyst at Swissquote Bank

.

"

With yesterday's stress on banking stocks, a 50 basis point rise by the ECB at its monetary policy meeting is less than certain

," said the expert.

According to her, “

the ECB could opt for a smaller hike or no hike at all at its meeting to let the dust settle before any further action

”.

The market now finds it hard to believe in a rate hike from the US central bank next week.

Banks are recovering

The index of the European banking sector (Stoxx 600 Banks) was slowly climbing the slope (+2.24% at 08:30 GMT), after having plunged by almost 7% the day before.

Credit Suisse shares jumped more than 22% in strong trading volume.

In London, HSBC took 3.79% to 569.00 pence and Barclays 3.33% to 142.84 pence.

In Paris, BNP Paribas, Crédit Agricole and Société Générale gained more than 2%.

In Frankfurt, Commerzbank and Deutsche Bank climbed more than 3%.

The oil market was rebounding slightly, after its lowest since the end of 2021 reached the day before.

Around 08:25 GMT, the barrel of American WTI recovered 0.72%, to 68.10 dollars, and the barrel of Brent from the North Sea regained 1.14%, to 74.54 dollars.

The euro was trading for 1.0622 dollars, against 1.0577 dollars on Wednesday at 9:00 p.m. GMT.

The yen also appreciated against the dollar, which was worth 132.77 yen around 07:00 GMT against 133.42 yen on Wednesday at 21:00 GMT.

Source: lefigaro

All business articles on 2023-03-16

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