Negative day for European stock exchanges, with Milan’s Ftse Mib down by 1.6% to 25,494 points. Heavy drops for Iveco (-4.3%), Telecom Italia (-4.1%), Finecobank (-4.1%) and Unicredit (-3.6%). Against the trend Saipem (+1.7%) followed by Stm (+0.4%).
Wall Street was also negative, on a volatile day also due to the simultaneous expiry of options and futures on indices and options. First Republic Bank drops 25%, despite the injection of liquidity for a total of 30 billion dollars by 11 banks, including Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, Goldman Sachs and Morgan Stanley.
The financial sector turmoil triggered by the bankruptcy of SVB depressed investor sentiment, worried about a possible economic downturn. US banks have borrowed nearly $165 billion in the past week, an indicative sign of funding difficulties.
Bond yields down, with the two-year bond down by 22 bp to 3.94% and the ten-year bond (-15 bp) to 3.42%. Btp-Bund spread at 193 basis points, with the Italian 10-year bond at 4.03%. Dollar down against other major currencies, with the EUR/USD exchange rate up to 1.067 and the dollar/yen down to 132.2. Among the raw materials, oil is once again losing ground, with Brent at 73 dollars.
The spotlight now turns to next week’s Federal Reserve meeting. Powell and colleagues should opt for a 25 basis point rate hike, but the events of recent days leave many uncertainties. The evolution of officials’ prospects should also be monitored, in the light of market expectations which currently price in a rate cut of up to 100 basis points from the peak by the end of the year. In the coming days, the preliminary PMI indices for March in Europe and the USA will also be published, useful for defining the macroeconomic situation for the first quarter in more detail.