MILANO – Mini respite in the markets after yesterday’s tumultuous reopening of the markets following the bankruptcy of Silicon Valley Bank. With Wall Street limiting its losses yesterday, closing in contrast today Europe is moving under the banner of caution: banks still in difficulty, but general indices holding up. In Asia day in trouble for Tokyowhich marks the largest daily decline in three months and ends at -2.19%, also bad Hong Kong discounting the crash of HSBC, which yesterday announced that it would take over the British assets of Silicon Valley Bank.
The spotlights of the markets are focused above all on the reaction of central banks to the current crisis. Thursday is the turn of the European Central Bank, until a few days ago projected towards a discounted rise of 50 points while next week it will be the turn of the Fed, now under pressure to soften its monetary policy line. Yesterday the trend in swaps even indicated a stop to increases for the whole of 2023 as the most probable scenario, i.e. a decisive change of course, but the Central Bank also remains focused on macroeconomic data. In this sense, no further surprises come from US inflation: in February the rate was +6%, as market expectations.
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Contrasted European stock exchanges, positive Milan
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Moody’s targets six banks
US inflation expected: +6% in February
Inflation slows down in the US. Consumer prices in February rose by 6.0% on an annual basis, in line with analysts’ expectations. On a monthly basis, the increase was 0.4%, in line with forecasts. Consumer prices had risen by 6.4% in January.
Stock exchanges, banks still weak
Banks still nervous, after the sales on the eve and while the market is dealing with the double bankruptcy in the US banking sector. Banks are weak but without the sell-off of the eve in Europe, with a sector down by 0.58%. In Milan, Banco Bpm drops 2.65%, badly Bper (-2.38%), while Unicredit loses 1.11% and Intesa 0.44% with Mediobanca rising against the trend of 1 .08%. UBS analysts in a report this morning widen their eyes on the big picture, underlining that the bankruptcies will help rewrite the narrative of the market, with a more sober outlook for the future a decrease in equity valuations. For banks, UBS confirms its preference for European ones over US ones, thanks to lower valuations, greater distribution of returns, greater probability that the ECB will keep rates high for longer. Both in the US and in Europe, the preference goes to larger banks over small ones.
Ft: venture capital firms evaluate alliance to save SVb business
Since the end of last week, writes the Financial Times, a group of venture capital firms is discussing how to preserve parts of Silicon Valley Bank’s business so it can continue to serve technology clients. Among the companies involved in the talks include General Catalyst, Andreessen Horowitz and Khosla Ventures. One of the proposals under discussion is the formation of a consortium with the private investment company Apollo Global Management which could make an offer for some branches of SVB.
Spread in calo
The spread between the BTP and the German Bund is down to 188 basis points, with the yield on the Italian 10-year bond at 4.24% on the secondary market.
Industrial production slows in January
In January 2023, the seasonally adjusted index of industrial production is estimated to decrease by 0.7% compared to December. This was revealed by Istat, emphasizing that on average for the November-January quarter the level of production decreased by 1.0% compared to the previous three months. Corrected for calendar effects, in January 2023 the overall index increased in trend terms by 1.4% (there were 21 calendar working days against 20 in January 2022)
Europe swings with the banks
The European stock exchanges turn down but hold after the collapse of the eve in the wake of the failure of the Californian Silicon Valley Bank and the cascade of Signature Bank. Wall Street futures are positive while Treasury yields have stabilized with the 2-year around 4% pending US inflation mid-day.
The lens is on the next moves of the central banks. First the ECB which on Thursday will have to take into account the tensions on the banking system, then the Fed. Some large investment banks went so far as to foresee a break (Goldman and Natwest) and others (Nomura) even a 25 basis point cut at the meeting of next week.
Among the individual squares in detail, Milan appears more nervous than others, while Istat estimates that in January industrial production will decrease by 0.7% compared to December. The Ftse Mib turns at -0.11% with the banks remaining in check. In particular Bper (-2.5%) and Fineco (-2.4%) The spread between Btp and Bund rises to 193 points with the yield at 4.23%. Paris is also down -0.1%. The drop in London was more marked (-0.5%). While Frankfurt is still above parity (+0.18%). The area index, the stoxx 600, fell mainly with energy-related stocks. Oil ends up with WTI below 73 dollars a barrel (-2.7%) and Brent below 79 dollars a barrel (-2.3%). Gas drops 3.95% with TTFs in Amsterdam above 47 euros per megawatt hour. For exchange rates, the euro rose to 1.07 against the dollar.
Contrasted European stock exchanges, positive Milan
Contrasted opening for the main European Stock Exchanges: just a few minutes after the start of trading, Piazza Affari gains 0.20% with the Ftse Mib at 26,236 points. Frankfurt (+0.22%) and Paris (+0.10%) are also in positive territory. Weak London, which scores -0.11%.
Moody’s targets six banks
Moody’s has placed First Republic Bank and five other US lenders on watch pending a downgrade. The move is yet another sign of concern for the health of regional financial institutions following the collapse of Silicon Valley Bank.
In addition to First Republic, the institutions under observation, reports Bloomberg, are Western Alliance Bancorp, Intrust Financial, UMB Financial, Zions and Comerica.
The spread opens higher
The spread between Btp and Bund opens up close to 194 points. The yield on the Italian 10-year bond fell again to 4.15%. More evident on the biennial whose decline is 10 points. The same goes for the German Bund (-18 points) and the French Oat (-21 points)