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Thursday, March 30, 2023

European markets fall dragged by Credit Suisse and First Republic plummets more than 25%

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European stock indices extend their weekly decline and post losses of up to 2.8% this Friday, March 17, after opening higher. The decline is largely explained by the Credit Suisse stock plunge which, despite having been bailed out by the Swiss National Bank, extend the losses, to which is added the collapse of the First Republic Bank that drags the banks that saved it on Thursday.

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The actions of First Republic Bank plunge more than 25% after a brief paralysis of the prices, since the 30,000 million dollars in deposits injected by big banks did not manage to calm the worries of the investors.

For its part, Credit Suisse shares fall more than 10% in Switzerland and lose 6% on Wall Street. The bank already suffered spectacular stock market crashes this week and given the fears for the banking sector, it received a bailout from the Swiss central bank to reinforce its liquidity for up to 50 billion Swiss francs (54,000 million dollars).

The banks that bailed out First Republic Bank follow it lower, such as shares of JPMorgan Chase & Co (-3.4%), Citigroup Inc (-3.5%), Bank of America Corp (-4.1% ), Wells Fargo & Co (-3.9%), Goldman Sachs (-2.9%).

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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.

The index London FTSE 100 loses 1%, the CAC 40 of Paris yields 1.5% and the Frankfurt DAX falls 1.4%. In Madrid, the IBEX 35 it was also operating at a loss, down 2%.

In Wall Street also traded in the redwith a fall of Dow Jones of 1.2%of 1.1% of the S&P and of 0.8% of the Nasdaq.

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After a turbulent week, eleven banking giants in the United States pledged on Thursday to rescue the entity First Republicwhich allayed fears of a new bankruptcy after the collapse of Silicon Valley Bank, Signature Bank and Silvergate last week.

This news was held by the Federal Reserve (Fed)the United States Treasury and two regulators, at a time of fear among investors of a risk of contagion to other banking entities.

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.

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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