CAC 40: After a trying week, the CAC 40 fell by 4%

(BFM Bourse) – The Paris index fell 1.43% on Friday, remaining focused on banking records. Over the week, the fall amounts to 4%.

The Paris Bourse ends the week on its knees, the specter of a new banking crisis having haunted the markets since Monday. Friday’s session was unfortunately part of this trend. At the close, the CAC 40 lost 1.43% to 6,925.40 points. Over the whole week, the index fell by 4.09%.

The CAC 40 accelerated its losses with the opening of Wall Street and the plunge of First Republic Bank (-25%), a Californian bank which was the subject of a rescue Thursday evening from eleven major banks, including Citibank, Bank of America and JPMorgan. These establishments have decided to provide it with 30 billion dollars of unsecured deposits so that it has liquidity.

“The question now is whether it will be enough,” said Quincy Krosby, of LPL Financial, quoted by AFP about the boost from the big names in the place to First Republic. “Questions remain about the soundness of the financial system.”

Other regional and medium-sized establishments have suffered, such as PacificWest Bancorp, which lost 13.6%.

Credit Suisse plunges back

Credit Suisse for its part continues to suffer in the aftermath of its support by the Swiss National Bank (SNB). The establishment activated Thursday an option allowing it to borrow up to 50 billion Swiss francs from the SNB.

If this announcement allowed a resumption of the course Thursday, the action fell by 8% this Friday in Zurich. “The main problem is that the liquidity support [de la BNS] does not solve the bank’s well-known structural problems and, above all, its low profitability, Credit Suisse recorded losses of 1.6 billion Swiss francs and 7.3 billion Swiss francs respectively in 2021 and 2022” notes Capital Economics.

“The bank has a restructuring plan which aims to resolve these issues over a period of three years, but it is not certain that the markets will give it that long,” continues Capital Economics.

This resurgence of tension also affected listed French banks. The BNP Paribas share lost 1.95%, Credit Agricole 2.3% and Societe Generale (-0.16%) had its resistance to an increase in HSBC’s recommendation to buy.

“A frantic week in financial markets is coming to an end and it is clear that investors are feeling very anxious about carrying the risk until the weekend”, judge Craig Erlam of Oanda.

Gold as a safe haven

Investors will eagerly await the meeting of the US Federal Reserve (Fed), which is due to end next Wednesday, to find out what the US central bank decides on its rates, given the recent financial turmoil.

“Will financial stability weigh more than price stability in the decision? Unless things get worse by March 22, a 25 basis point hike (0.25%) may be a choice of compromise”, emphasizes Oddo BHF.

On values, outside of banks, Wendel lost 4.3% after publishing its financial results on Thursday evening.

On other markets, the euro gained 0.3% against the dollar at 1.0645 dollars. Oil prices are driven by falling equity markets. The North Sea Brent contract for May delivery fell 3.6% to $72.10 a barrel while the April contract on New York-listed WTI fell 3.5% to $65.95 a barrel .

Gold takes him 2.3% to 1,966.20 dollars an ounce.

Julien Marion – ©2023 BFM Bourse

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