Perhaps yesterday’s rebound is the beginning of the end of the strange financial storm that has been plaguing the markets for a week. Both the Ibex and the rest of the European and American markets rose yesterday after the 54,000 million dollars put up by the Central Bank of Switzerland to guarantee the solvency of Credit Suisse and that the ECB complied with its rate hike.
Even so, the European markets have not yet recovered the levels of Thursday of last week before the rescue of the American Silicon Valley Bank. The Dow Jones closed last night with a rise of 1.17%. The Ibex rebounded 1.50% and the German Dax 1.57%. Credit Suisse, despite rising 19%, continues with a very damaged price. As can be seen in the attached chart, the markets are gradually on their way to recovering the levels of last week.
What remains to be resolved, however, is the instability plaguing bank values, which still show no signs that the storm has passed for everyone. In Spain, for example, two of the four big banks (Santander and BBVA) rebounded strongly yesterday (2.6% and 3.4% respectively) but the other two (CaixaBank and Banco Sabadell) fell a little more (-1 .3% and -0.5%). In Europe BNP rebounded 1.31% and Deutsche Bank fell 1.3%.
“Comparing the situation with that of Lehman Brothers does not make any sense. There is no war on deposits or liabilities”, says Jaume Puig, general director of GVC Gaesco Gestión. “The problem is volatility and that in Europe they always react in a much more extreme way,” he adds. Luis Benguerel, an independent analyst, goes further: “they are speculative movements by investors who seek profits with volatility.” They are moments of panic in which non-professional investors are the ones who end up losing money.
The ECB’s decision to raise rates was as expected. The proof is that the markets barely reacted to the official announcement at noon yesterday. Only the Ibex went into the red a few minutes after the decision, but it quickly returned to gains. Following the ECB decision, all eyes are now on next week, when the Federal Reserve will decide whether to raise rates again or decide to take a pause, until the choppy waters in the banking sector calm down. A slowdown in American monetary policy could influence the ECB’s strategy and, above all, project doubts, which could be very negative for the European stock markets.
Credit Suisse acknowledged in a statement that the BNS loan was a “decisive action to preventively strengthen its liquidity”, something vital for a bank that last year, involved in multiple crises, saw capital fleeing the entity worth 124,000 euros. Credit Suisse’s problems are by no means less than this week. The entity chained two years of millionaire losses: in 2021 they were 1,600 million and in 2022 they almost quintupled, to 7,400 million. In addition, in the last 11 years it has paid fines worth 11,000 million.
