(CercleFinance.com) – Wall Street should open on a note of caution on Monday morning, the climate of suspicion surrounding the solidity of the European banking system having repercussions on the American stock markets.
Half an hour before the opening, the futures contracts on the major New York indices are advancing from 0.1% to 0.3%, announcing a start to the week around equilibrium.
The formalization last night of the takeover of Credit Suisse by UBS did not, however, completely stabilize the banking stocks of the Old Continent, which suffered further losses on Monday.
In Zurich, the Credit Suisse share fell by more than 56%. On the Euro STOXX 50 index, the heaviest declines still came from securities such as ING (-3.7%) or BNP Paribas (-1.2%).
‘The acquisition of Credit Suisse by UBS eliminates in our opinion the immediate threats which weighed on the sector, but also raises some questions’, react this morning the analysts of Jefferies.
The American broker wonders in particular about the lack of a vote by UBS shareholders on the merger (due to the activation of an emergency procedure) and about the total losses suffered by the holders of AT1 subordinated debt, unlike shareholders who are doing better.
Unlike their European counterparts, US banking stocks are expected to rebound Monday in early trading after dropping 16% over the past month.
Investors are nevertheless preparing to face the same turbulence this week that plagues Wall Street and other global markets, namely the threat of a new global financial crisis.
The collapse in oil prices is also an additional factor in distrust of the markets, with a barrel of American light crude which lost 0.5% to 66.4 dollars, the lowest since the end of 2021.
After digesting the announcement of the forced marriage between UBS and Credit Suisse, investors will probably avoid taking too risky positions two days before the Fed’s monetary policy decisions.
The Federal Reserve – which is meeting its strategic committee tomorrow and Wednesday – is faced with an uncomfortable dilemma, confronted on the one hand with an access of fragility in the banking sector and on the other with inflation which is struggling to ebb.
According to the CME Group’s ‘FedWatch’ barometer, investors estimate that the probability of a ‘status quo’ from the US central bank at the end of its FOMC this week is close to 48%.
The remaining 52% are counting on a limited rate hike of 0.25 percentage points.
Investors, on the other hand, will not have many corporate results or leading economic indicators to chew on in the coming days.
The activity observed on the VIX, the CBOE’s volatility index which measures variations on the S&P 500 index, seems for the moment to predict a less agitated start to the week than the past week.
But this apparent calm could be followed by a new wave of new violent fluctuations in the markets in the event of an aggravation of the current crisis.
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