The banking sector of the broader Stoxx Europe 600 index declined for its part by 3.53%, after a sharp increase in the cost of insurance against the risk of default (CDS) of several European banks, Deutsche Bank in the lead. (Photo: 123RF)
Paris — European stock markets suffered on Friday from Deutsche Bank’s bout of weakness, which reignited anxiety about the banking system, but Wall Street pulled out of the doldrums to end in the green.
In Europe, the places fell by 1.74% in Paris, 1.66% in Frankfurt, 1.26% in London after a first part of the week in the green following the disaster takeover of Credit Suisse by its rival. UBS.
“Uncertainty spreading through the markets” led “the banking sector to give up all of its year-to-date gains in the space of three weeks,” said CMC Markets analyst Michael Hewson.
The banking sector of the broader Stoxx Europe 600 index declined for its part by 3.53%, after a sharp increase in the cost of insurance against the risk of default (CDS) of several European banks, Deutsche Bank in the lead.
Roughed up, the first German bank unscrewed by 8.53% after having sunk more than 13%. Commerzbank dropped 5.45% in Frankfurt.
Michael Hewson sees ‘no clear catalyst’ to explain the day’s bearish move ‘other than uncertainties about the prospect of future rate hikes and the effects this could have on financial stability’ and the rest of the economy .
In Paris, Societe Generale shares fell 6.13%, the largest drop in the CAC 40 index, BNP Paribas lost 5.27%. In London, Standard Chartered fell by 6.42%, but also Barclays (-4.21%) or Natwest (-3,58%).
A matter of trust
Recent moves by central banks to improve access to liquidity and efforts to restore confidence in the banking system have averted panic, but have failed to bring stability to markets.
The statements of Christine Lagarde, President of the European Central Bank (ECB), reaffirming the resilience of the banking system which “has solid positions in terms of capital and liquidity”, and those of Olaf Scholz or Emmanuel Macron, who wanted to be reassuring, did not know how to calm the spirits.
“The euro zone is the zone where the banks are the strongest,” said the French president, while the German chancellor judged that there “is no reason to worry” for Deutsche Bank.
US President Joe Biden told him on Friday in Ottawa (Canada) that the “banks were doing pretty well” and that he saw nothing “about to explode”.
Traveling to his Canadian neighbor, the American president however recognized that it would take “a little time for things to calm down”.
In New York, Wall Street has managed to overcome its anguish and restore momentum to its indices.
The Dow Jones gained 0.41%, the index Nasdaq took 0.31% and the index widened S&P 500 gleaned 0.57%.
“The market is digesting a very volatile week,” commented Adam Sarhan of 50 Park Investments. In this context, “the absence of bad news is considered a positive point. The fact that no major bank fell this week is, in itself, favorable. »
In fact, the VIX index, which measures market volatility, ended down 3% after jumping 11% at the start of the day.
Wall Street’s favorite target since the failure of three American establishments, the regional bank First Republic (FRC) limited its losses (-1.44%) after having sold up to more than 6%.
Also read: Deutsche Bank: CDS, a financial tool at the heart of the turbulence
Dollar and government bonds wanted
The bond market once again acted as a refuge for investors: the yield on 10-year US government bonds stood at 3.37%, against 3.42% the day before closing.
Another safe haven, the dollar rose 0.66% against the euro, to 1.0760 dollar for one euro.
Victims of a movement of risk aversion, oil prices fell on Friday.
A barrel of Brent North Sea oil for May delivery fell 1.21% to $74.99 after falling more than 3%.
Its US equivalent, a barrel of West Texas Intermediate (WTI), for same month delivery, fell 1.00% to $69.26 after falling to $67.47.
The bond market once again acted as a refuge for investors: the yield on 10-year US government bonds stood at 3.37%, against 3.42% the day before closing.
Another safe haven, the dollar rose 0.66% against the euro, to 1.0760 dollar for one euro.
Victims of a movement of risk aversion, oil prices fell on Friday.
A barrel of Brent North Sea oil for May delivery fell 1.21% to $74.99 after falling more than 3%.
Its US equivalent, a barrel of West Texas Intermediate (WTI), for same month delivery, fell 1.00% to $69.26 after falling to $67.47.