The fear that the banking situation that began two weeks ago with the bankruptcy of SVB will continue to spread and end up affecting the economy is still present in the markets. Despite the apparent calm produced this week by the acquisition of Credit Suisse by UBS, this Friday the debt buyback announced by Deutsche Bank -another of the large European entities that had problems- once again unleashed the selling character of investors over banks, despite the fact that this is normally considered a measure that shows the robustness of a company.
The German entity collapsed this Friday in double digits, reaching a drop of up to 15% -although it remained at 12% of its historical lows-. The German’s probability of default has increased and is five years above the industry average, but it is not at the levels reached by Credit Suisse. From Autonomus they pointed out that “we have no concerns about the viability or the brands of Deutsche assets. To be very clear, Deutsche is not the next Credit Suisse“.
To this new trigger, we must add the new rate hike by the US Federal Reserve that occurred last Wednesday. The agency finally decided to continue its fight against inflation, despite the banking situation, and increased the price of money by 25 basis points, placing rates in the 4.75%-5% range. Now, the market places the ceiling of the monetary policy in this band, so does not discount for the moment more rate hikes by the Fed. Also, on Thursday, Treasury Secretary Janet Yellen announced that while they are prepared for more bank deposit protection measures, they are not 100% insured. This Friday, Yellen has called a private meeting of the Financial Stability Oversight Board.
Despite these fluctuations and the collapses that occurred this weekend, the rebounds that the stock markets experienced the rest of the days have left the weekly calculation positive. Thus, the EuroStoxx 50 and the Italian stock market have become lThe most bullish indices of the Old Continent, with gains of 1.65% and 1.56% respectively. The Cac, the Dax and the Ibex 35 posted 1.30%, 1.28% and 0.84% respectively. On a technical level, Joan Cabrero, advisor and strategist at Ecotrader, “the rebound developed by the European stock markets from Monday’s lows could have ended with the general closure of the gaps that the European stock markets opened last Tuesday.” The closing of the Ibex below the 8,833 points that Cabrero pointed out as support “would be warning us that the rebound that was born at Monday’s lows could have ended and in such a case we could be in front of the second bearish leg that I have been insisting on for days”.
On Wall Street, this same Thursday, the Nasdaq 100 touched intraday the 12,900 points that were the highest for the year. In the weekly computation, at mid-session, the main North American indices are slightly revalued, but their gains do not reach 1%.
By value, the week ended with five Ibex companies with losses of more than 5%. Bankinter is the one that falls the most, with 6.61% and continues to be the Spanish bank with the most annual losses, of 19.24%, the most bearish firm of the Ibex. They are followed by Solaria, which dropped 6.1%, and Fluidra, which fell another 5.6%. On the other side of the table is Indra, which has gained 6.5% in the last five sessions, followed by Arcelor, which adds 4%, and Endesa, with another 2.8%. Banco Santander and BBVA sneak into the ten most bullish of the week.
Faced with this new fear that the financial crisis will take on a new dimension, investors have taken refuge in fixed income. The yield on the US bond with a maturity of 10 years, after experiencing a drop of 12 basis points during the week, fell back to the lowest for the year, at a yield of 3.36%. In it bund German sales also prevailed in the last session of the week and with a return of 2.1%, it is close to the lows of 2023.
The euro accumulates four consecutive weeks revaluing at its cross with the dollar. This week gains of 0.8% are recorded and at half an American session it is placed in the environment of 1.07 dollars, after reaching 1.09 at the intraday level on Thursday.