Rise in sight in Europe with the calm on the banks

by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to rise on Tuesday at the opening in a context of calm in the banking sector, the American authorities having announced the day before their support for the plan to buy the assets of Silicon Valley Bank (SVB ) by First Citizens BancShares.

Futures contracts on indices suggest an increase of 0.47% for the CAC 40 in Paris, 0.33% for the Dax in Frankfurt, 0.27% for the FTSE 100 in London and 0.41% for the EuroStoxx 50.

The takeover, with the support of the authorities, of the deposits and loans of Silicon Valley Bank, whose fall has caused panic in the markets, as well as possible additional aid to the sector, are now fueling hopes of a crisis. limited.

Michael Barr, Vice Chairman of the US Federal Reserve (Fed), will assure on Tuesday that the banking system is “strong and resilient” and that depositors’ money is safe, according to statements prepared for a hearing outside the US Senate at 2:00 p.m. GMT.

Martin Gruenberg, president of the FDIC, the federal bank deposit guarantee authority, will say for his part that the American financial system is healthy and that most banks do not see any significant outflow of funds from their customers. The two leaders will note, however, that the current rules need to be reviewed and that a comprehensive review is underway on how the agencies supervise banks.

However, caution could persist in the markets, especially as Philip Jefferson, one of the governors of the Fed, said on Monday that the current banking stress could affect smaller companies, which are very dependent on regional banks, harder than expected.

“This cycle of uncertainty that we are seeing is likely to continue for some time to come,” said Manishi Raychaudhuri, director of Asia-Pacific equity research at BNP Paribas. “We’re not at the end of it yet,” he added, predicting continued market volatility for at least another quarter or two.

VALUES TO FOLLOW IN EUROPE:

A WALL STREET

The New York Stock Exchange ended in mixed order on Monday, with the Dow Jones and S&P-500 ending slightly higher after the deal on Silicon Valley Bank assets, while the Nasdaq fell on the back of the “tech”.

The Dow Jones Industrial Average gained 0.6%, or 194.55 points, to 32,432.08 points.

The broader S&P-500 gained 6.54 points, or 0.16%, to 3,977.53 points.

The Nasdaq Composite fell for its part by 55.12 points (0.47%) to 11,768.84 points.

JPMorgan Chase and Bank of America posted gains of 2.9% and 5% respectively, while Citizens BancShares saw its stock jump more than 50%, dragging the rising S&P-500 banking sector in their wake. by 3.1%.

IN ASIA

At the Tokyo Stock Exchange, the Nikkei index nibbles 0.06% to 27,492.89 points and the Topix, larger, takes 0.21% to 1,965.98 points as the close approaches.

In China, the Shanghai SSE Composite gained 0.21% and the CSI 300 lost 0.01%.

The MSCI index comprising stocks from Asia and the Pacific (excluding Japan) gained 0.3%.

CHANGES

The dollar fell (-0.22%) for the second consecutive session against a basket of reference currencies with the ebb of fears around the banks.

The Japanese currency rose 0.69% to 130.65 yen per dollar. Analysts say this is likely linked to the repatriation of profits made overseas by Japanese companies, with the end of the annual financial year falling on Friday.

The euro is trading at $1.0809 (0.12%).

RATE

Yields on ten- and two-year US Treasuries fell about two basis points, to 3.511%, and about four points, to 3.9324%, respectively, after their sharp rise the day before.

OIL

The oil market is broadly stable, investors wondering about the banking crisis and demand in China: Brent gains 0.47% to $77.75 a barrel and US light crude (West Texas Intermediate, WTI) 0, 14% to $72.71.

(Written by Claude Chendjou, edited by Bertrand Boucey)