The banking crisis hit stocks this week…and oil is declining
In a very turbulent week due to the severe crisis that afflicted giant banks in the United States and Europe, stock indices generally fell, especially European stock exchanges, as investors worried regarding the worst problem in the sector since the financial crisis in 2008 that has not yet been contained. Japanese stocks closed lower today, Friday, with the rise of the yen and concerns regarding the financial system, and the barrel of oil fell following America announced a slowdown in refilling the strategic reserves.
The major European banks index fell 2.2% in early trading Friday, with Swiss bank UBS down 6.4%.
Deutsche Bank also fell 5.4% following a sharp jump in the cost of insuring once morest default late on Thursday.
After the sudden collapse this month of two US banks sparked turmoil in the sector, UBS rushed to take over Credit Suisse on Sunday following the ailing Swiss bank lost investor confidence. According to two informed sources, the Swiss authorities and UBS are racing to complete the acquisition within a month, in an effort to retain Credit Suisse clients and employees.
And “Bloomberg News” reported that “Credit Suisse” and “UBS” are among the banks subject to scrutiny, in an investigation conducted by the US Department of Justice into whether financial specialists helped wealthy Russians evade sanctions, while “Credit Suisse” declined. And “UPS” for comment, while the Ministry of Justice did not respond to requests from “Archyde.com” via e-mail for comment.
The drop in European banking stocks follows US losses on Thursday, as investors were looking to see how far the authorities would support the sector, especially the fragile banks.
For the fourth time in a week, US Treasury Secretary Janet Yellen spoke yesterday, Thursday, to reassure citizens that the US banking system is safe. She told US lawmakers that bank regulators and the Treasury Department are ready to provide blanket guarantees on deposits at other banks, as they have done at Silicon Valley Bank and Signature Bank.
In Tokyo, Japanese shares closed lower today, Friday, as the rise in the yen raised concerns regarding falling profits of local companies, while investors continued to worry regarding a broader banking crisis.
The Nikkei index decreased by 0.13%, to close at 27,385.25 points, down by 0.19% during the week. The broader Topix index fell 0.1% to 1955.32 points, recording a weekly loss of 0.2%.
The yen touched a 6-week high once morest the dollar today, Friday, as dealers continued to evaluate the Federal Reserve’s (US central bank) hints of pausing interest rate hikes. Risk appetite was affected following the collapse of the “Silicon Valley” bank and the liquidity problems of the Swiss “Credit Suisse” bank raised concerns regarding a global financial crisis.
The drop in oil as a result of a US slowdown in reconfiguring the strategic reserve
In the energy market, oil prices fell today, Friday, continuing the losses of the previous day, due to fears of a possible glut in supply, following US Energy Secretary Jennifer Granholm said that refilling the US strategic oil reserves may take years.
And by 00:39 GMT, the price of a barrel of Brent crude futures fell 48 cents, or 0.6%, to $ 75.43, and West Texas Intermediate crude futures fell 52 cents, or 0.7%, to $ 69.44.
The two benchmarks are still on track to record weekly gains ranging between 3% and 4%, recovering from the largest weekly decline in months last week due to the banking sector crisis and fears of a possible recession.
Granholm told members of the House of Representatives on Thursday that it will be difficult to take advantage of lower oil prices this year.
Sales directed by President Joe Biden last year pushed oil stocks to their lowest levels since 1983. And the White House announced in October that it would buy back oil for the Strategic Reserve when the price of a barrel was in the $67-$72 range or less.
(Archyde.com, The New Arab)
