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MARKET REVIEW. The Toronto Stock Exchange joined international markets on Wednesday morning and was plunging early in the trading session on worries surrounding the global banking sector.
The New York Stock Exchange, meanwhile, traded lower on Wednesday shortly following the open as banking sector anxiety returned and a dip in Europe fueled risk aversion.
Read also: Credit Suisse shares in freefall
To (re)consult market news
Stock market indices at noon
In Toronto, the S&P/TSX fell 427.72 points (-2.17%) to 19,266.44 points.
In New York, the S&P 500 fell 59.06 points (-1.51%) to 3,860.23 points.
The Nasdaq fell 97.23 points (-0.85%) to 11,330.92 points.
The DOW yielded 575.26 points (-1.79%) to 31,580.14 points.
The loonie was down US$0.0061 (-0.8378%) to US$0.7247.
Oil was down US$4.04 (-5.66%) at US$67.29.
Gold gained US$17.30 (+0.91%) to US$1,928.20.
Bitcoin retreated US$1,503.66 (-5.79%) to US$24,477.51.
In Toronto, the S&P/TSX fell 427.72 points (-2.17%) to 19,266.44 points.
In New York, the S&P 500 decreased by 59.06 points (-1.51%) to 3,860.23 points.
The Nasdaq fell 97.23 points (-0.85%) to 11,330.92 points.
The DOW yielded 575.26 points (-1.79%) to 31,580.14 points.
The loon dropped US$0.0061 (-0.8378%) to US$0.7247.
The oil decreased by US$4.04 (-5.66%) to US$67.29.
L’or earned US$17.30 (+0.91%) to US$1,928.20.
The bitcoin retreated from US$1,503.66 (-5.79%) to US$24,477.51.
The context
“Bank shares are once once more moving the markets” following the Saudi National Bank indicated that it would not increase its stake in the capital of Credit Suisse, a weakened establishment of which it is the largest shareholder, noted Chris Low, of FHNFinancial.
In the wake of European banks, American establishments were once more quarantined. Medium-sized players and regional banks were the most affected, especially Californians First Republic (FRC, -14.58%) et PacWest (PACW, -20.38%), as well as the brand from Phoenix (Arizona) Western Alliance (WAL, -6,16%).
But the tide was rising to some industry behemoths in the United States, like Capital One (COF, -6,00%), Citigroup (C, -5.14%) and Wells Fargo (WFC, -4,68%).
“There’s no smoke without fire,” commented Adam Sarhan of 50 Park Investments. “There is clearly a problem within the financial system, not just with a small regional bank in California.”
The VIX index, which measures market volatility, jumped more than 20% on Wednesday, indicating nervousness among investors.
“As long as we don’t see more clearly, everyone puts themselves in a defensive position”, launched Adam Sarhan.
Just like Monday, operators rushed to the assets deemed the safest, primarily US Treasury bonds. The yield on 10-year US government bonds fell to 3.38% from 3.68% the previous day’s close.
A wave of bond buying causes their price to rise and their yield to fall, with the two moving in opposite directions.
The 2-year rate, which has been very volatile in recent months because it is more sensitive to operators’ expectations in terms of monetary policy, tumbled to 3.71%, the lowest for six months.
Usually supported by an easing in bond rates, the technology sector was at half mast, in particular the semiconductor giant Broadcom (AVGO, -1.77%) and the graphics card maker Nvidia (NVDA, -2,02%).
The Dow Jones did little better, with almost all the stocks making up the index trading negative.
“The ingredients are in place for an episode similar to 2008,” says Adam Sarhan. “I’m not saying it’s going to happen, but the conditions are there.”
Given the climate of generalized tension, the operators paid little heed to the indicators of the day, which nevertheless had something to seduce them.
Producer prices fell 0.1% in February month on month, while economists forecast a rise of 0.3%, an encouraging sign of slowing inflation.
In addition, retail sales also fell by 0.4%, still in February, in line with expectations, while the industrial activity index in the New York region, the Empire State Manufacturing Index, slipped in March to -24.6, significantly lower than expected (-7.6).
This deceleration of the economy, added to the turmoil shaking the banking system, prompted brokers to abruptly recalibrate their monetary policy forecasts.
On Wednesday, they granted the hypothesis of maintaining the key rate of the American central bank (Fed) unchanged, at the next meeting, a probability of almost 50%, the other scenario being that of an increase of a quarter point.
They also saw the majority of the Fed lowering its rate by at least one percentage point by the end of 2023 compared to the current level, the opposite of the dominant forecasts a few weeks ago (+1 point).
