CAC40: ends in red, the banking sector under tension


(CercleFinance.com) – The Paris Stock Exchange ends this last session of the week with a contraction of 1.3%, to 7220 points, penalized by the heavy decline in banking stocks, like Societe Generale (-4, 5%), BNP Paribas (-3.8%) or Crédit Agricole (-2.5%).

The Parisian index thus lost 1.7% over the past week but still maintains an impressive gain of 11.5% since the start of the year.

Today, jitters were palpable in the markets due to fears over the possible default of two US banks, SVB Financial and Silvergate.

Silicon Valley Bank (SVB) has moreover just announced that it has failed to launch a capital increase in order to bail itself out after suffering heavy losses on the sale of part of its bond portfolio (1, $8 billion) in an attempt to free up cash.

The title of this 40-year-old company, which helps finance Californian technology companies, fell more than 60% last night at the close of Wall Street … and remains suspended this Friday (while the company can no longer make dealing with withdrawals and returning their money to customers, which is the very definition of bankruptcy).

It is dragging First Republic Bank (-50%) and Signature Bank (-31%) in its wake, which could in turn face significant withdrawals (‘bankrun’).

The ‘regional banks’ sector ETF in the United States experienced its worst week since autumn 2008, with a weekly decline of almost -10%.

Still in the banking sector, Silvergate Capital, an institution very focused on cryptocurrencies, continued its fall (-42%) yesterday after having expressed its intention to go into liquidation soon.

These announcements caused the US equity markets to fall on Thursday, fearing a domino effect of the crisis on the model of the sequences which precipitated the 2008 financial crisis. Indeed, these cases are reviving investors’ doubts as to the the health of the US financial system, and the sustainability of current debt levels.

It is mainly financial stocks that have been attacked over the past 48 hours, with investors seeking to reduce their positions vis-à-vis the sectors most sensitive to current uncertainties.
The Bank of America share thus lost more than 6% (-3% today), Citigroup around 4% and Morgan Stanley not far from 3%.

These fears logically led to a rush towards less risky assets, such as gold (+2.7% to $1,864) or government bonds.

Rates are also easing spectacularly as experts anticipate action by the FED on interbank to avoid a freeze (in a climate of mutual suspicion), which would add liquidity.
Our OATs erased -17.5Pts at 2.965%, Bunds -18Pts at 2.461% and Italian BTPs -11Pts at 4.28%.

Across the Atlantic, the relaxation is even more spectacular: the yield of the ’10 years’ falls by -22Pts to 3.00%, the yield of the ’30 years’ also falls below 3.705%, the yield of the ‘2 years’ erases -25Pts at 4.65%.

The highly anticipated ‘NFP’ published at 2:30 p.m. is more of a non-event.

The US economy has allowed the creation of 311,000 jobs: this marks a marked slowdown after the sharp increase in January (517,000 jobs created), but it is 45% more than the 215,000 new jobs expected.

Wall Street is trying to reassure itself with an unemployment rate at 3.6% as well as with the stabilization of wage growth (+0.2%).

In corporate news, Casino published this morning a consolidated Group turnover of 33.6 billion euros, up +5.2% on a comparable basis compared to the previous year. Net income for the consolidated group, Group share, stood at -316 ME compared to -534 ME in 2021.

ArcelorMittal announced on Friday that it has completed the acquisition of Companhia Siderúrgica do Pecém (CSP) in Brazil, a transaction completed on the basis of an enterprise value of approximately 2.2 billion dollars.

Spie reported on Friday an “excellent” financial performance for its 2022 financial year. Its annual production reached 8.09 billion euros, up 6.9% organically compared to 2021.

For fiscal 2023, Spie said it is aiming for mid-single-digit organic growth, i.e. around 5%, with further improvement in its BITA margin.

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