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Thursday, March 30, 2023

European markets recover after bank collapse

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European stock indices rise in the first operations of this Friday, March 17 and extend the recovery of the previous day thanks to the fact that fears of a banking crisis eased slightly after the main US authorities and banks took steps to rescue First Republic Bank.

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In a crisis that began last Friday with the collapse of the Silicon Valley Bank, based in the United States, risk appetite plummeted earlier in the weekwhen investors they lost confidence in regional banks of the country and in the Credit Suisse in Europe. The week ended with a plunge in bond yields as investors lowered their expectations for future rate hikes.

Global markets stabilized somewhat on Thursdayaided by the declaration of Credit Suisse that it would borrow up to 50 billion Swiss francs (54,000 million dollars) to the Swiss National Bank and, later that same day, the injection of 30,000 million dollars in deposits by a group of large banks in First Republic Banka mid-sized US lender.

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Still, analysts say the concern over a possible banking crisis is far from over.

The index msci global equities, which tracks stocks in 47 countries, gains 0.4%. He STOXX 600 Europe adds 0.7%, but continued to lose 1.9% in the week, Meanwhile he FTSE 100 of London rises 0.9%.

He IBEX 35 Spain barely fell by 0.1%, but the general index of the Madrid Stock Exchange advances in the same proportion. The latter had been hit hard earlier in the week, particularly Spanish banks, by contagion from the SVB collapse. He dax german also contracted 0.1%, while the swiss stock exchangehit by the wobble of Credit Suisse, lost 0.4%.

For the most part, the global stock exchanges they recover and operate upwards.

The profitability of 2-year US treasury bondswhich is the most sensitive to changes in interest rate expectations, up 2 basis pointsat 4.1384%, closer to Wednesday’s six-month low of 3.72% than the 5.084% high it hit the previous week, which had been its highest level since 2007.

He European Central Bank raised rates 50 basis points on Thursday, keeping his promise to fight the inflation even as some investors called for a pause in the rate hike cycle until the banking turmoil subsides.

He performance of reference of the German 10 year debt is stable around 2.255%and euro zone short-term government bond yields rise.

The Markets anticipate a 25 basis point hike by the US Federal Reserve at their meeting next week, versus earlier expectations for a 50 basis point rise.

Source: Ambito

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