A police car parks outside the headquarters of the First Republic Bank in San Francisco on March 13, 2023 (GETTY IMAGES NORTH AMERICA/AFP/Archives/JUSTIN SULLIVAN)
Asian markets rose again on Friday, relieved like Europe and Wall Street the day before by support measures for Credit Suisse and American banks and by the reassuring message from the European Central Bank (ECB).
Eleven major US banks pledged on Thursday to rescue First Republic, the 14th largest bank in the United States by the size of its assets, which was in the hot seat after the failures of Silicon Valley Bank, Signature Bank and Silvergate, because it mainly serves a wealthy clientele.
This action was welcomed by the American authorities, the Ministry of the Economy, the central bank (Fed) and two financial regulators and allowed the shares of the Californian bank to go from a drop of more than 30% to a rise. by about 10%.
The Fed said on Thursday that it had lent nearly $12 billion to banks since Sunday, via a new specific program, intended to allow them to honor withdrawal requests from their customers. The usual very short-term loans jumped, over one week, from barely 5 billion dollars to 152 billion.
The institution also lent $142.8 billion to the two entities created by regulators to succeed SVB and Signature Bank – a New York brand closed on Sunday by the American regulator.
– “Not redo 2008” –
The main American indices, which had opened the day in the red, passed Thursday evening in positive territory, the S&P 500 ending up 1.8%.
Wall Street now has “hope that the worst is behind us,” said Maris Ogg of Tower Bridge Advisors. “If you take the First Republic and Credit Suisse bankruptcies out of the picture, it calms people down.”
European Central Bank President Christine Lagarde gives a press conference on March 16, 2023 in Frankfurt (AFP/Daniel ROLAND)
“I don’t think we’re going to do 2008 again”, foresees the manager, “because the problem does not come from the credit portfolios but from the fact that (the American central bank) raised its rates from 0 to 4, 50% in nine months.”
The Asian stock markets recovered Friday morning from the emotions of the day before, the flagship Nikkei index in Tokyo taking 0.69% at the opening and the broader Topix index 0.68%.
In early trading in Hong Kong, the Hang Seng Index was up 1.23%.
In Shanghai, the composite index took 0.57% and that of Shenzhen rose by 0.71%.
This recovery is in the wake of European markets, which regained height Thursday after a message of confidence in the banking sector from the European Central Bank (ECB).
The Frankfurt-based institution raised its main interest rate by half a point and said it was ready to intervene if necessary to “preserve financial stability” in the euro zone.
Somewhat reassured at the close, Paris took 2.03%, Frankfurt 1.57%, Milan 1.38% and London 0.89%, gains however lower than their losses the day before.
The guardians of the euro, however, remained cautious on the continuation of monetary tightening and abandoned their commitment to raise rates further “significantly” in the months to come.
Another fire was brought under control on Wednesday with the commitment of the Swiss central bank to lend up to 50 billion Swiss francs in cash to Credit Suisse, also put in difficulty by a phenomenon of contagion.
After the worst session in its history on Wednesday, Credit Suisse regained 19.15%, without compensating for the drop of nearly 25% the day before. Over the week, the action fell by another 19.88%.
The OECD is due to release its global growth forecasts for the next two years later today.
© 2023 AFP
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