Stocks get another banking scare
The S&P 500 rebounded from its session lows on Wednesday. The index stayed under siege as hints of increased trouble at Credit Suisse fueled additional fears of an impending financial crisis and prompted more negative wagers on banks.
Credit Suisse Group plummeted 24%, bringing its year-to-date losses to 40%, as fears grew over a run on the Swiss bank. The trouble arose after its largest supporter, Saudi National Bank, stated that it would be unable to give more financial support due to regulatory restrictions.
Credit Suisse recouped a portion of its losses at the end of the trading day, finishing 14% in the red. Credit Suisse’s problems led to mounting fears of a broad financial crisis at a moment when other US institutions are also under the microscope.
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Even as the Fed intervened to save the Silicon Valley Bank and Signature Bank and launched a new loan facility to avert more bank runs, concerns about a worsening financial crisis have emerged. The S&P 500 sank 0.9%, while the Dow Jones dropped 1.1%, or 350 points, and the Nasdaq Composite dipped 0.1%.
Lower Treasury rates propelled large tech companies higher and helped balance a decline in semiconductor stocks, leaving the technology sector unchanged. Alphabet and Facebook both gained more than 2%, while Amazon, and Microsoft traded well over 1% in the green.
Traders move towards the US dollar to seek safety
When traders turned to risk aversion on Wednesday, the US dollar was the gaining currency. The US dollar index, which measures the greenback against six major competitors, increased by more than 1% as a result of the US banking crisis’s potential global spread.
On Wednesday, the EUR/USD fell more than 2%. The European Central Bank will hold its monetary policy meeting on Thursday. Experts at Rabobank caution that a 50 basis point rate hike may not be enough to boost the Euro if traders believe that it increases the chance of a recession.
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USD/CAD advances on safe-haven demand for the greenback, finishing 0.55% higher. The Swiss currency also fell 2% against the US dollar, as the Swiss National Bank set fire to the euro and the franc.
Hellish day for oil
WTI, the US benchmark crude, reached a low of $65.70 a barrel, marking a low not seen since December 2nd, 2021, when it reached an intraday low of $63. It ultimately closed Wednesday’s trading at $67.61, a loss of $3.72 (or 5.2%).
Brent crude closed at $73.69 a barrel, down $3.76, or 4.9%. It previously reached an intraday low of $71.77, a level not seen since December 21st, when it fell $71.24. From the beginning of the week, the global crude benchmark has decreased by 12%.
Silver futures were able to resist most of the dollar’s rise and closed only slightly in the red with a 0.57% decline. Gold futures however, were able to gain and acted again as a safe haven. The yellow metal closed at $1922 with a 0.6% gain.
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