World stock markets rebounded on Thursday after he The European Central Bank (ECB) will raise its official rate by 50 basis points (bp) but with improved economic projections, First Republic Bank will find financial support in the big banks of Wall Street y Credit Suisse US$54 billion in fresh capital will be secured to clear up the doubts that caused massive sales of shares in the previous day.
At the close of the New York Stock Exchange, the Nasdaq Composite expanded 2.48%, the S&P 500 grew 1.76% and the Dow Jones rose 1.17%. With this result, the technology index reached its highest level since February 17.
Bank shares rebounded with the lead by Western Alliance Bancorp (14,10%) y First Republic Bank (9,98%)since the latter it would be on its way to being bailed out by the largest banks in the United States through a plan involving US$30 billion.
First Republic’s stock fell sharply on Wednesday after it Fitch and S&P Ratings will downgrade their bonds to what is popularly known as “junk” category.
Chile and Europe
In the Santiago Stock Exchange, the S&P IPSA closed flat at 5,197.37 points. 17 of the 29 stocks in the index lost value, led by Colbún (-2.80%), Entel (-2.76%) and Bci (-1.82%).
JPMorgan downgraded to “neutral” its recommendation regarding the role of Bcidue to the higher risks of its exposure to US regional banking through its subsidiary City National Bank of Florida.
crossing the Atlantic, the pan-European Euro Stoxx 50 jumped 2.45%, the CAC 40 in Paris rose 2.03%, the DAX in Frankfurt added 1.57% and the FTSE 100 in London gained 0.89%.
Credit Suisse’s stock rallied 19.15% after closing yesterday down 24.24%. Their credit default swaps (CDS) at one year fell 7.91%, but after nearly quintupling in the previous day. The CDS measures the cost of insuring against an eventual bankruptcy.
Dollar closes volatile session flat marked by ECB announcements and lifeline to Credit Suisse
Firm rate hike
This morning, The ECB followed the forecasts and its own guidelines by raising the reference rate by 50 bp to 3.50%. Prior to the meeting, the market’s bets on an increase of this magnitude had weakened -which a week ago was widely agreed-, in view of the alerts that the fall of Silicon Valley Bank has been lighting up for the past few days.
ECB President Christine Lagarde told a press conference that “it is not possible to determine at this time” the path of future ratesand held that “the banking sector is in a much, much stronger position” compared to 2008when the global financial crisis broke out.
Among the updated economic projections of the governing body, growth in 2023 was revised upwards to 1.0% on average, while both 2024 and 2025 were assigned positive variations of 1.6%.
Added to this, there was a new batch of economic data in the US, where real estate figures pulverized analysts’ estimates. New construction grew 9.8% and building permits approved expanded 13.8% month-on-month in Februaryagainst forecasts that hardly contemplated progress.
problems in switzerland
The stock markets experienced a day of high tension this Wednesday after the main shareholder of the troubled Credit Suisse – listed as a systemically important bank – declined to increase its share.
But later, Credit Suisse reported that it has US$54 billion available from a line of credit offered by the governing bodyadding that it will also seek to repurchase nearly US$3.2 billion of its bonds to strengthen its position and give confidence to the market.
The turbulence of the last day did not go unnoticed in the Asian squares, where Tokyo’s Nikkei 225 fell 0.80%, Hong Kong’s Hang Seng lost 1.72% and mainland China’s CSI 300 fell 1.20%.