The banks stand united to fight the fears
After media reports that several of the nation’s leading bank entities were in negotiations to assist First Republic Bank, the banking sector staged a strong comeback on Thursday, helping the major indexes continue gains.
Financial entities, notably JP Morgan Chase & Co. and Morgan Stanley, along with 9 other bank institutes, were prepared to inject as much as $30 billion into First Republic Bank’s reserves to rescue the company. It appears that banks watch out for one another in times of distress. This statement came from Fed and also the Department of Treasury among others.
The newest development in the regional bank story followed the European Central Bank’s 50 basis point rate rise, which had a negative impact on investor optimism already hampered by worries of a financial catastrophe.
ECB rates chart, source: tradingeconomics.com
Credit Suisse’s US-listed shares increased by 2.55% after the bank acquired a credit line of up to $54 billion with the Swiss National Bank. The SNB intervened to enhance liquidity and consumer trust.
The shares of JP Morgan bank and Morgan Stanley bank increased by 2.3% and 1.97%, respectively. The value of First Republic Bank shot back up by 10.72%. The Dow Jones rose 1.14%, the S&P 500 rose 1.71%, and the Nasdaq ended up 2.5%.
Indices were also boosted by tech, with Meta climbing more than 3% and Snapchat increasing more than 7%. Microsoft revealed that it will install an AI-based office add-on to compete with Google. The stock price increased by more than 3%.
Dollar is looking for direction
The US dollar was looking for direction as ECB rate hike left the traders wondering what to do. The banking and the hike sent mixed messages, pushing the greenback slightly lower.
The US dollar index remained almost flat with a 0.15% decline to 104.110 area. Same goes for EUR/USD, which gained a mild 0.36%.
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Against other pairs, the dollar remained mixed. Japanese yen lost its initial gains of more than 1% versus the dollar to close 0.28% on the back foot. The Canadian dollar however, gained on a little risk appetite, closing 0.36% stronger against the US dollar.
Traders think the US dollar might be overbought. Therefore, they are not leaving much more room for the greenback to climb higher across the board.
Oil saved by Saudis and Russians
Risky assets including oil saw a raise on Thursday thanks to above mentioned banking save. WTI finished 1.1% in the green, at $68.35, inching back to the $70 area from the 15-month low during the previous session. Brent crude closed at $74.70, up 1.4%.
Saudi Arabia and Russia had a meeting about market stability enhancement. Prince Abdulaziz bin Salman, the Saudi energy minister, and Alexander Novak, the Russian deputy prime minister, managed to meet to review the OPEC+ group’s attempts to preserve market equilibrium.
Gold futures lost some of their save haven ground. The yellow metal is holding above $1,920 with a red close of 0.4%. Silver is also mostly unchanged at $21.81 with a 0.3% decline to a red close.