2023-08-08 21:51:34
US stocks fell following Moody’s downgraded the credit rating of ten banks
US stocks continued their decline on Tuesday, this time driven by Moody’s downgrading the credit rating of 10 regional US banks, due to the exposure of these banks to liquidity problems, and the prospects for the US economy to enter a recession.
In trading on the second day of the week, the Dow Jones Industrial Average lost 158 points, which represented 0.45% of its value at the beginning of trading, and the S&P 500 index fell by 0.42%, and the Nasdaq index lost 0.79%. Tuesday was the fifth day of losses for the last two indices in the last six trading days. The losses of the Nasdaq index since the beginning of the month exceeded 3%.
On Monday evening, Moody’s lowered the rating of ten US regional banks, and put six giant banks, including “Bank of New York Mellon”, “US Bancorp”, “State Street” and “Trust Financial”, under review, for a possible downgrade.
“Many banks’ second-quarter results showed mounting pressure on profitability that will reduce their ability to generate internal capital,” Moody’s said in a note.
“This comes at a time when a mild recession looms in the United States in early 2024, and asset quality appears to be declining, with particular risks in the commercial real estate portfolios of some banks,” she added.
In Europe, European stocks fell today, Tuesday, following the Italian Cabinet agreed to impose a windfall gains tax on Italian banks by 40%.
Shares of Italian banks fell by more than 9%, following Deputy Prime Minister Matteo Salvini said that the imposed tax would finance items such as tax differences and deductions, as well as financial support for mortgage holders on their first home.
The Stoxx 600 index of European shares fell 0.2%, and the Italian index fell 2.1%, reaching its lowest level in four weeks, following it rose in the recent period to its highest level in several years.
Shares of banks in the broader euro zone fell 3.5%, in their worst day since last March, also affected by the news of Moody’s downgrading the credit rating of many small and medium-sized US banks.
On the other hand, Novo Nordisk’s stock jumped 17.3%, hitting a new record, bringing the company’s market value to $300 billion, following the Danish pharmaceutical company said that a large study showed that its drug (Wegovi) for treating obesity also has a clear medical benefit on the heart and blood vessels. bloody.
Germany’s DAX fell 1.1%, following data showed inflation in Europe’s largest economy fell to 6.5% in July, in line with economists’ expectations.
In a related way, oil prices rose today, Tuesday, following a US government agency expected a more optimistic view of the largest economy in the world, although the announcement of a decline in China’s oil imports limited the rises.
Brent crude futures rose 83 cents, to reach $86.17 a barrel, while US West Texas Intermediate crude rose 98 cents, to $82.92 a barrel, upon settlement. Both contracts fell $2 earlier in the session.
However, prices rose following a monthly report by the US Energy Information Administration on Tuesday predicted a 1.9% growth in US gross domestic product (GDP) in 2023 instead of 1.5%.
It is expected, according to the management report, that the price of a barrel will reach $86 in the second half of 2023, an increase of regarding seven dollars from previous expectations.
He expected US crude production to rise by 850,000 barrels per day to 12.76 million in 2023, surpassing the last peak of 12.3 million barrels per day in 2019.
The Energy Information Administration said that crude oil prices have been rising since June for reasons, led by Saudi Arabia extending voluntary cuts in its crude production and increasing global demand.
The Energy Information Administration expects that “these factors will continue to reduce global oil inventories and put upward pressure on oil prices in the coming months.”
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