Moody’s alarm and credit tensions weigh down Piazza Affari. But it is all the European Stock Exchanges which, after trying to limit the damage at the start of the day, have gradually lost ground, sunk by sales on bank stocks. The sector therefore remains under pressure after the flight of deposits recorded by First Republic Bank in the first quarter, which renewed fears about the conditions of the American banking system. Investors’ mood was worsened by the decision of Sweden’s central bank, Riksbank, which raised rates by 50 basis points to 3.5%. A decision linked to the uncertainties that still remain on the evolution of inflation, which remains too high, and which could lead to new tightening. The positive trend of Wall Street futures, driven by big tech following the encouraging indications from Microsoft and Alphabet, is therefore not enough for European stock markets at the moment. In Piazza Affari, the Ftse Mib dropped 1.18% with Intesa Sanpaolo at -2.17%, Unicredit at -2.54%, Bper at -3.99% and Banco Bpm at -4.33%, while in rest of Europe Frankfurt loses 0.93%, Paris 1.01%, Amsterdam 0.99% and Madrid 0.66%. The spread rises after the alarm from Moody’s.
Enria’s reassurances
After the States, a beacon could therefore also open on European banks. However, yesterday reassurances came from the chairman of the supervisory board of the ECB, Andrea Enria, during a webinar on banking stability in the Eurozone: «There are areas in which a review and better definition of the requirements could be needed, but our framework has proven to be robust. We don’t see any elements of contagion between the US and Europe», said Enria, who however added: «The ECB and the EBA are asking the European banks for more information regarding possible losses on the bond portfolio due to the rate hike. We do not have very detailed information on banks’ hedging practices on this type of asset. The new data will allow regulators a more precise picture also in view of this year’s stress tests».
Pnrr, government in trouble over June targets: “Asylum plan unfeasible”
ALESSANDRO BARBERA
Eyes on the ECB
In the meantime, attention is focusing on the next meeting of the European Central Bank and the hypothesis of a new rate hike by the central institute is growing at the next meeting on 4 May, even if its size could be reduced to 25 points. The rate hike has «positive effects on profits. There are obviously issues that come up around asset quality but generally the positive effects on earnings outweigh,” Enria said.
Government bonds
Meanwhile, the Ministry of the Treasury has placed BOTs for a total of 6 billion, with the six-month rate leaping to the top since November 2011. In particular, savers have absorbed 3.5 billion of 6-month bonds since the reopening of the bond on 31/03 /2023, at a weighted average rate of 3.329%, up 25 basis points on the previous auction. Also assigned 2.5 billion annual BOTs, from the reopening of the security on 02/14/2023, at a weighted average yield of 3.430%. Both bonds were placed for the maximum amount of the range on offer. Requests for the half-year period amounted to 5.296 billion for a coverage ratio of 1.51, while requests for the annual amounted to 4.225 billion for a coverage ratio of 1.69.