PARIS (Reuters) – The New York Stock Exchange opened lower on Friday in a session that is expected to be undecided due to the “four witches” which marks the expiry of several futures contracts as the banking sector remains under pressure despite the aid provided to the American regional bank First Republic Bank.
In early trading, the Dow Jones index lost 187.9 points, or 0.58%, to 32,058.65 points and the broader Standard & Poor’s 500 fell 0.21% to 3,951.84 points.
The Nasdaq Composite lost 0.01%, or 0.63 points, to 11,717.907.
The Vix index of volatility is displayed at 23.72 points (+3.17%), while this third Friday of March marks the day of the “four witches” corresponding to the expiration of four types of derivatives and large volumes in trade.
Bond yields on ten-year and two-year Treasuries fell respectively to a session low of 11 points, at 3.469%, and four points, at 4.08%.
In values, First Republic Bank, which announced a suspension of the dividend, fell 17.01% on Friday after jumping the day before by 10% in session following the announcement of aid of 30 billion dollars from several large American banks which are trying to avoid a domino effect after the bankruptcy of several banking establishments last week.
The regional bank Pacwest Bancorp plunged 11.96%, while its competitor Western Alliance lost 6.0%. The big banks Jpmorgan Chase, Bank Of America and Wells Fargo fell from 1.96% to 2.78%, while the sector index lost 2.51%.
SVB Financial Group, the bank behind the crisis in the sector, announced on Friday that it had filed for bankruptcy protection in order to reorganize itself.
“We are not out of the woods yet. The rally seen in equities yesterday was more of a relief than an indicator that we have truly turned a corner,” notes Stuart Cole, director macroeconomist at Equiti Capital.
On the monetary policy side, after Thursday’s 50 basis point rise in rates by the European Central Bank (ECB) despite market turbulence, investors are now awaiting decisions next week from the US Federal Reserve (Fed).
Money markets are pricing in an 83% probability of a 25 basis point hike in Fed rates on March 22.
In business results, Fedex jumped 9.25%, the group having raised its annual profit forecast, thanks to a reduction in its costs.
Industrial production posted zero growth in February after contracting 0.2% the previous month and a consensus of +0.2%. The University of Michigan Confidence Index will be released at 14:00 GMT.
(Written by Claude Chendjou, edited by Kate Entringer)
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