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The ECB raises its rates, European stock markets rebound



(New York) European stock markets rebounded on Thursday, reassured by support for Credit Suisse and the American regional bank First Republic, as well as by the message of confidence in the banking sector from the European Central Bank (ECB).

European markets recovered sharply at the end of the session, after the press conference by ECB President Christine Lagarde.

Paris ended up 2.03%, returning to 7,000 points, Frankfurt by 1.57%, London by 0.87%, Milan by 1.38%. Over the week, they still lost between 2.7% and 5%.

The movement came from index heavyweights, such as luxury in France. The Eurostoxx 50 index thus gained 2.03% while the Eurostoxx 600 gained only 1.19%.

The European banking sector index (Stoxx 600 Banks) recovered 1.17% after falling more than 7% on Wednesday.

Europe had started in the green after the Swiss central bank on Wednesday made available to Credit Suisse, weakened, 50 billion Swiss francs (74 billion dollars CAD) of liquidities.

The indices of the Old Continent gained height after the communication of the ECB, which raised its main interest rate by half a point but by matching the decision “with precautions of language concerning the risks on financial stability”, has noted Axel Botte, international strategist for Ostrum AM.

The guardians of the euro remained cautious on the continuation of the monetary tightening and abandoned their commitment to raise rates further “significantly” in the coming months, a sign of easing welcomed by the market.

Wall Street had also welcomed these developments but, for the New York market, the breaking point came with the publication of press reports reporting the possible support of several large American banks for their small regional competitor, First Republic.

In the red so far, the main indices have ostensibly gone into the green.

The momentum was confirmed by the official announcement, before closing, according to which eleven of the biggest names in the market will place 30 billion dollars in deposits in the accounts of the Californian institution.

The Dow Jones ended up 1.17%, the NASDAQ gained 2.48% and the broader S&P 500 index advanced 1.76%.

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 equation, it calms people down. »

“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 jagged banks

After the worst session in its history on Wednesday, Credit Suisse rebounded thanks to support insurance from the Swiss Central Bank and a massive loan to bolster its liquidity. The action recovered 19.15%, without compensating for the fall of nearly 25% the day before. Over the week, the action fell by another 19.88%.

The Swiss federal government was to hold a special meeting on Thursday devoted to the Swiss banking giant.

Apart from Credit Suisse, some European banks remained under pressure such as Société Générale (-1.21%), Deutsche Bank (-1.29%), even if UniCredit took 2.72% and Barclays 2.99%.

The massive injection of deposits within First Republic catapulted the action of the bank (+9.98%), which had lost up to 36% at the start of the session.

Other regional brands abused on the stock market since Friday have resumed colors, including Western Alliance (+ 14.10%), Bank of Hawaii (+ 10.67%) or Valley National (+ 8.30%).

The big American banks rode the wave, like Bank of America (+3.46%) and Wells Fargo (+3.84%), which are both part of the group that came to the rescue of First Republic .

On the side of currencies and oil

The euro gained 0.34% to 1.0613 dollars around 4:55 p.m. (Eastern time).

Oil prices rebounded from a low since late 2021 hit the previous day. The barrel of Brent from the North Sea ended up 1.37% at 74.70 dollars, while the American West Texas Intermediate (WTI) gained 1.09%, at 68.35 dollars.

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