In the aftermath of Black Monday – with the SVB effect that burned 291 billion in Europe with the flight from the banks despite the Fed
– the markets are trying to rear their heads, even if the trend remains nervous, and the bankers remain unknown on the list. There
slow is the next moves of the central banks. First the ECB which on Thursday will have to take account of the tensions on the banking system, then the Fed. But the concern remains. Moody’s puts First Republic Bank and five other US lenders under observation pending a downgrade: yet another sign of concern for the state of health of regional financial institutions after the collapse of Silicon Valley Bank.
In particular, European stock exchanges are down but holding after the collapse of the eve in the wake of the failure of the Californian Silicon Valley Bank and the cascade of Signature Bank. Wall Street futures are positive while Treasury yields have stabilized with the 2-year around 4% pending US inflation mid-day. The lens is on the next moves of the central banks. First the ECB which on Thursday will have to take into account the tensions on the banking system, then the Fed. Some large investment banks went so far as to foresee a break (Goldman and Natwest) and others (Nomura) even a 25 basis point cut at the meeting of next week. Among the individual places in detail, Milan appears more nervous than others, while Istat estimates that in January industrial production will decrease by 0.7% compared to December. The Ftse Mib turns at -0.11% with the banks remaining in check. In particular Bper (-2.5%) and Fineco (-2.4%) The spread between Btp and Bund rises to 193 points with the yield at 4.23%. Paris is also down -0.1%. The drop in London was more marked (-0.5%). While Frankfurt is still above parity (+0.18%). The area index, the stoxx 600, fell mainly with energy-related stocks. Oil ends up with WTI below 73 dollars a barrel (-2.7%) and Brent below 79 dollars a barrel (-2.3%). Gas drops 3.95% with TTFs in Amsterdam above 47 euros per megawatt hour. For exchange rates, the euro rose to 1.07 against the dollar.
INFLATION
The international scenario remains characterized by a high degree of uncertainty and downside risks. He claims it Istat in the Note on the trend of the Italian economy of February underlining that “a path of inflation recovery is beginning to take longer than initially expected”. In the fourth quarter of 2022, Italian GDP recorded a slight negative economic change as a synthesis of the positive contribution of net foreign demand and the negative one of domestic demand net of inventories.
The SVB effect overwhelms the markets
The failure of the Silicon Valley Bank overwhelms the European markets, where the stock exchanges burn 291 billion euros, and sends the banks to the bottom. With Piazza Affari losing 4% and sending 24 billion euros up in smoke. The intervention of the American authorities over the weekend, which also allows unsecured deposits to be paid to customers of the Californian bank which went into default last Friday following the bank run, did not help to avoid a drop in investor confidence. Not only towards the US financial sector after another bank, Signature Bank, went bankrupt on Sunday due to the domino effect linked to SVB and cryptocurrencies. And where there are fears of contagion on a long list of regional banks including First Republic and Western Alliance which on Wall Street have collapsed with losses exceeding 67% despite US President Joe Biden having assured his fellow citizens that their deposits are safe. Confidence has also failed towards European banks and not only in the United Kingdom where Svb UK, the local branch of the Santa Clara group, of which the Bank of England had declared insolvency, was sold for 1 euro to the giant HSBC . Under the wave of sales, all the banking institutions were somewhat overwhelmed, starting with those that had liquidity problems such as Credit Suisse (-9.5%) and Commerzbank (-9.7%), although the rules in Europe are much more stringent than the American ones. In the general collapse of European lists, which burned 291 billion, it was a black Monday more than the others for Piazza Affari: with a 4% crash it did worse than Frankfurt (-3%), Paris (-2.9%) and London (-2.5%) and alone sent 24 billion up in smoke, thanks to the fact that the Milanese stock market is full of financial stocks including Bper and Unicredit which left over 9% on the ground. The reassurances of the Ministry of the Economy led by Giancarlo Giorgetti were of little avail, who recalled that “the Italian and European banking system is regularly monitored by the supervisory and supervisory authorities, thus ensuring its stability”. The analogous intervention of his colleague from beyond the Alps, Bruno Le Maire, had little effect in Paris
Source: Ansa
I am a journalist who writes about economics and business. I have worked in the news industry for over 5 years, most recently as an author at Global Happenings. My work has focused on covering the economy news, and I have written extensively on topics such as unemployment rates, housing prices, and the financial crisis. I am also an avid reader and have been known to write about books that interest me.
