Wednesday, March 29, 2023

Wall Street begins one of the Saturdays and is heavily tinged with ballast

The DOW JONES fell 0.66% to 31,698, while the S&P 500 fell 0.97% to 3,824 points. The NASDAQ 100 fell 0.73% to 11,059 points.

After these cases, the financial sector is once again in the eye of the storm despite H’s efforts to avoid contamination in the case of SVB Financial. To avoid the risk of spreading throughout the US and the financial world, the US authorities announced that all bank deposits are guaranteed by the state, including those that exceed 250,000 dollars (234,000 coins), which is formally the maximum that the authorities cover. .

At the same time, the Federal Reserve announced the establishment of an emergency lending program, with the approval of the Treasury Department, to provide additional funds to banks in need. Backed by $25 billion in cash from a fund initially designated for currency stabilization but now regularly used to support federal aid programs in times of crisis, the program will provide loans of up to one year to banks, savings banks, credit unions, and others. institutions have deposited in exchange for US Treasury bonds, the agency’s debt, backed by mortgage collateral.

“We’re going into the weekend as a very binary event. Either 100% of uninsured depositors were going to be supported, or they weren’t,” said Peter Boockvar, chief executive officer at Bleakley Financial Group, in a statement to CNBC. However, “it is not necessarily the answer to the problem of what happens next in terms of economic impact” [de] banks that are going to arrange deposit rates across the board”. “The outlook is that I’m more concerned about banks’ earnings than their balance sheets.”

At the moment, the truth is that Hed’s plan does not seem to be very comforting, since Republic Bank Primo fell in the bank shares on Monday with a fall of 64% at the opening, after it had fallen by 33% last week. PacWest Bancorp fell 37%, and Western Union Bancorp plunged 29% pre-open. Zion Bancorp lost 11%, while Keycorp fell 10%.

The fear also extends to the big Wall Street banks, although to a lesser extent: Bank of America falls more than 4.5% in the first opening, while Citigroup falls 2.5% and JPMorgan Chase 0.85%. The latter looks at how Wells Fargo analysts revised their value proposition.

Nerves in one of the most closely watched indexes to measure fear and stock market volatility, the CBOE Volatility Index, commonly known as the VIX, rose more than 4 points to 29.03, near levels not seen since 2022.

Earlier this year, the index, which weights the volatility of S&P 500 options, was a low of 17.06. VIX values ​​above 30 are often associated with extreme lightness and risk.

Outside the banking sector, one of the protagonists of the day is SeaGen, which advances more than 18%, after learning that Pfizer will take the company in an agreement for an approximate value of 43,000 million dollars, which portfolio Cancer treatments Pfizer as it suffers a decline in sales of products from Covid. Pfizer is paying $229 in cash per Seagen share, a 32.7% premium to Friday’s closing price.

Shares of the biotech company Illumina rose 8.2% after The Wall Street Journal reported that billionaire activist Carl Icahn is preparing a power struggle in the company.

Slow rate hikes?

On the other hand, investors are looking forward to more macroeconomic outlooks during the week. Tuesday’s consumer price index (CPI) is the next major inflation data released before the next Federal Reserve meeting, which ends on March 22. Sales figures for February and the producer price index will also be published in the coming days.

Until now, the market was waiting to see whether H would raise interest rates by 50 or 25 points at the March meeting, but the latest events force us to rethink our mental outlook. For example, Goldman Sachs no longer sees a case for federal support to raise rates at the March meeting of the Federal Market Committee (FOMC), economist Jan Hatzius said in a note on Sunday.

“In light of the stress in the banking system, we no longer expect the FOMC to raise rates at its next meeting on March 22,” Goldman Sachs said in a note. Hatzius and economists together added that they still expect an increase of 25 basis points in May, June and July, recalling the expectation of the statement of terms of 5.25% to 5.5%.

This change in scenario is clearly seen in the fixed income market, always very sensitive to financial changes. The yield on the benchmark ten-year bond fell 14 points to 3.5562%. Even stronger is the drop in the two-year yield, from 31 points to 4.2739%. A few days ago, it was over 5%.

In the interest markets, oil prices are starting the week lower after expectations of increased demand for black gold from China more than offset fears of a new financial crisis. A barrel of West Texas Intermediate fell 5% to $72.80, while benchmark Brent Oil futures in Europe fell 4.50% to $78.92.

Meanwhile, investors seem to be chasing gold at year highs. The yellow metal gained 1.4% to a total of $1,899.70 per ounce. The highest price since February 9, when the metal was $1,902.30.

The euro against the dollar recovers 0.16%, until the exchange rate is set at 1.0659 dollars of each currency community.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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