(New York) Risk aversion dominated trading rooms on Tuesday, putting pressure once again on the banking sector pending decisions by US and European central banks on interest rates.
Fears of a global recession also weighed on the oil sector.
Faced with several contradictory indicators of monetary policy, European markets fell 1.45% in Paris, 1.23% in Frankfurt and 1.24% in London.
On the one hand, inflation rose again in April in the eurozone, interrupting a series of five consecutive monthly declines, and on the other hand, conditions for granting loans were tightened in the first quarter, according to the European Central Bank (ECB). .
The data “makes a 25 basis point rate hike more likely” at the institution’s meeting on Thursday, said Ulric Kastens, an economist at DWS.
“The European Central Bank remains dependent on data and it is likely that further rate hikes will be considered. It must reaffirm this, ”on Thursday, the expert adds.
The Frankfurt Institute has raised interest rates by 3.50 percentage points since July 2022 as part of an unprecedented campaign of monetary tightening aimed at combating inflation.
On the New York Stock Exchange, new worries about the fate of US regional banks caused indices to fall: the Dow Jones and Nasdaq fell by 1.08%, and the S&P 500 lost 1.16%.
In the US, the Federal Reserve is expected to announce on Wednesday that it will raise the key interest rate by 25 basis points. But the language of its press release and that of Jerome Powell, its chairman, at a news conference will be scrutinized by investors hoping for an upcoming break in rate hikes.
The economic context is indeed increasingly bleak, with slower growth in the first quarter, just 0.3% sequentially and 1.1% year-on-year.
The possibility of a slight recession during the next two quarters is less and less doubtful for the majority of analysts, who expect a recovery only in the last quarter of this year.
US regional banks in the spotlight
Despite the acquisition of First Republic by JPMorgan the day before it supposedly eased the banking crisis, the sector was again targeted: regional bank PacWest fell 27.78% and Western Alliance 15.12%. These two securities have been suspended from trading on Wall Street several times due to the volatility.
In Europe, Germany’s Deutsche Bank (-2.79%) and Commerzbank (-4.16%) were the same as France’s BNP Paribas (-2.78%) and Societe Generale (-1.79%) in the red. In London, the activity of the HSBC banking group, on the other hand, increased by more than 3% after announcing a net profit that almost quadrupled in one year in the first quarter.
Chegg pays for ChatGPT
Shares of US online tutoring company Chegg fell more than 48% on Wall Street, after it warned that its revenues had been hurt by the advent of the ChatGPT artificial intelligence interface.
Crude oil prices are at their lowest since March
Oil prices extended losses as fears of a possible global recession continued to weigh on oil demand ahead of the Federal Reserve’s monetary policy decision.
A barrel of Brent from the North Sea for delivery in July lost 5.03%, to $75.32.
Its US counterpart, a barrel of West Texas Intermediate (WTI) for delivery in June, fell 5.28% to $71.66, its lowest in more than a month.
The greenback lost ground against the euro, with renewed nervousness in the US banking sector eradicating the rebound provided earlier by the greenback. Thus, the euro rose 0.22% to $1.1000 for one euro at 4:40 pm (ET).
Bitcoin rose 3.93% to $28,769.
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