by Diana Mandia
(Reuters) – European stocks ended sharply lower on Monday, hurt by falling bank stocks as authorities’ attempts to reassure the market after the collapse of U.S. bank SVB failed to calm fears of a possible impact on the sector.
In Paris, the CAC 40 ended down 2.9% at 7,011.5 points. The British Footsie lost 2.58% and the German Dax 3.04%.
The EuroStoxx 50 index dropped 2.99%, the FTSEurofirst 300 2.28% and the Stoxx 600 2.34%.
In deep trouble due to the accelerated rise in interest rates in the United States, SVB Financial Group, which operates as Silicon Valley Bank (SVB), collapsed on the stock market last week after a surprise capital increase intended to make up for a loss resulting from the sale of a bond portfolio.
The measures announced this weekend by the Fed to counter the threat of withdrawal of customer deposits, including making funds available to banks in need, did not allay concerns about the impact of bankruptcy on the sector as a whole.
Comments by several euro zone officials, who dismissed or downplayed the risk of contagion to institutions on the continent, did not help to reassure either.
A senior European Central Bank official said on Monday that eurozone banks were well-funded and more cautious than the SVB, which lent mainly to tech start-ups, as well as New York’s Signature Bank, which was also closed in the morning. course last weekend.
“The supervision of mid-sized banks in Europe is stricter, especially with regard to funding and liquidity,” said Marco Troiano, director of Scope Ratings, stressing that there was no turning back. on post-crisis regulations in Europe, unlike in the United States.
European finance ministers, meeting in Brussels, and the European Commissioner for the Economy, Paolo Gentiloni, also declared that they did not see any risk of contagion in the euro zone.
In France, the Minister of Finance Bruno Le Maire, assured that there was no “specific alert” on the sector.
In Germany, the Bundesbank nevertheless chose Monday to convene a crisis meeting to assess the possible effects of the collapse of the American bank.
President Joe Biden said the emergency measures taken by regulators should convince Americans that the banking system is safe, while promising tougher banking regulations.
VALUES
In Europe, the setbacks of SVB particularly weighed on Monday on the banking (-5.65%), finance (-3.76%) and insurance (-3.56%) compartments.
In values, Commerzbank lost 12.7%, Societe Generale 6.2%, BNP Paribas 6.8% – the bottom of the CAC40 -, Credit Suisse 9.5%, Sabadell 11.8% and Santander 7.3%.
HSBC for its part declined by 4.1% after announcing on Monday the acquisition for one pound sterling of the British subsidiary SVB.
Analysts agree that this is unlikely to be a direct contagion in Europe, but rather a sentiment effect.
“This move we’re seeing right now is more an indication of stress than anything else,” noted Piet Christiansen, chief analyst at Danske Bank.
AT WALL STREET
At the time of the close in Europe, the New York Stock Exchange was moving in the green in a session where trading in stocks was halted several times due to volatility: the Dow Jones gained 0.09% while the Standard & Poor’s 500 gained 0.25% and the Nasdaq Composite 0.91%.
US banks Morgan Stanley and JP Morgan were trading down 1.8% and 2.4% around 1650 GMT.
CHANGES
On the foreign exchange market, the prospect of a less aggressive Fed weighed on the dollar, which dropped 0.97% against a basket of benchmark currencies.
The euro took the opportunity to rise 0.86% to 1.0738 dollars.
Major cryptocurrencies stabilized on Monday after US authorities announced plans to limit the fallout from the SVB bankruptcy and Circle, issuer of the USDC stablecoin, said it remained redeemable in dollars.
RATE
The measures announced lead analysts to revise downwards their rate hike forecasts, starting with those of Goldman Sachs, which no longer expects the Fed to raise its rates in March and considers that the evolution of the cost credit beyond that date is uncertain.
Investors therefore rushed to safe havens on Monday, which caused the yield on two-year US Treasury bonds, the most sensitive to variations in the rate trajectory, to fall by 42 basis points, to 4.165%, and that of of the two-year German Bund by 37 basis points to 2.695%.
OIL
Oil prices are also hurt by fears of a new financial crisis following the collapse of SVB, although the prospect of a recovery in Chinese demand has provided some support: Brent is down 1, 81% to $81.28 a barrel and US light crude (West Texas Intermediate, WTI) 1.9% to $75.22.
TO FOLLOW TUESDAY:
Eurozone economy and finance ministers will meet in Brussels on Tuesday.
In the United States, investors will closely follow the publication of consumer prices for the month of February.
(Editing by Kate Entringer)
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