In the context of the financial crisis in the United States, the Dow Jones rose in anticipation of a pause in the rise in rates and the same happened with the Nasdaq after the Credit Suisse bailout.
After five days of consecutive falls, this Monday, Wall Street closed higher and thus maintained the opening trend. According to preliminary closing data, the S&P 500 gained 34.19 points, or 0.87%, and rose to 3,950.83 units, while the Nasdaq Composite rose 45.09 points, or 0.39%, to 11,675.60 (recovering from an initial drop), while the Dow Jones Industrial Average it shot up to 380.95 points, recovering 1.20%, to reach 32,242.93 units.
This happened the day after an agreement was closed to rescue Credit Suisse and the central banks made strong bets to reinforce confidence in the financial system. These actions evidently reassured investors as traders weighed the likelihood of a pause in rate hikes by the US Federal Reserve (FED), which also calmed stock markets.
The Credit Suisse bailout calmed the market
It should be remembered that the UBS bank agreed, late on Sunday, to buy its rival Credit Suisse for US$3.23 billion, within the framework of a merger designed by the Swiss authorities to avoid further turbulence in the banking group. And on the other hand, major central banks took action on Sunday to bolster cash flow around the world.
The S&P Banking Index and the KBW Regional Banking Index rose after heavy losses last week, after the failures of Silicon Valley Bank and Signature Bank rocked markets. “You see the market contains those banks, so it’s not spreading. Also, we’re seeing de-risking in the market,” said Quincy Krosby, chief global strategist at LPL Financial.
This sent, among other regional banks, PacWest Bancorp higher after the bank said deposit outflows had leveled off, while New York Community Bancorp rose after a unit of the bank agreed to buy Signature Bank deposits and loans.
“When it’s another bank that comes in, that’s the kind of news that helps shore up confidence in the banking system,” Krosby said. And he assured that this helps curb panic and fear. Thus, it is clear that the acquisition of Credit Suisse helped the market. However, US-listed shares of that entity fell sharply on Monday, while those of UBS Group rose.
Regional bank First Republic Bank also fell sharply after its ratings downgrade by S&P Global and a report of increased fundraising fueled concerns about the bank’s liquidity despite a $30 billion bailout last week. last week.
Looking ahead to the next few days, investors are also awaiting this week’s Federal Reserve decision. Before the turmoil with the banks earlier this month, many market players expected a 50 basis point interest rate hike from the Federal Reserve at its March meeting this week.
The rises are driven by a emergency liquidity operation launched by central banks of Europe and the United States (FED), but there are still tensions in the banking sector as a result of the financial crisis that unleashed the fall of Silicon Valley Bank.
The state-backed bailout of Credit Suisse appears to have helped allay some fears of a further banking crisis, as investors considered the likelihood of the United States pausing rate hikes this week to ensure financial stability, as that the banking problems triggered by the bankruptcy of Silicon Valley Bank and SignatureBank they threaten to snowball if he maintains an aggressive policy.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
