What a week! Authorities are working to contain a major banking crisis, after a run on deposits that shut down two U.S. banks and sent a third reeling. Meanwhile, Credit Suisse is on its knees and surviving thanks to the exceptional support of the Swiss National Bank. As for equity markets, they are showing some resilience, betting that central banks will be forced to reverse their austere monetary policies to give the financial sector some breathing space.
Weekly variations*
31861.98  -0.15%
12519.88  +5.83%
Chart NASDAQ 100
FTSE 100
7335.40  -5.33%
Chart FTSE 100
1988.50$  +5.90%
Chart GOLD
66.51$  -13.79%
Chart WTI
1.07$  -0.15%
This week's gainers and losers
  • Coinbase (+36%): The US cryptocurrency platform is benefiting from the rise in cryptoassets, particularly bitcoin, which has risen above USD 26,000. A performance that is paradoxical: decentralized finance is facing troubles due to the setbacks of traditional finance, while struggling US institutions have also been weakened by their exposure to the sector. 

  • Synlab (+35%): The German laboratory network, whose short stock market history has plenty of disappointments, has confirmed that it received an indicative takeover offer from its main shareholder, Cinven. The offer is expected to be made at EUR 10 per share, which is higher than the recent low of EUR 6.69, but far from the IPO price (EUR 18), let alone the peak of EUR 24.60. 

  • Advanced Micro Devices (+17%): AMD is among the best performers this week, but we could have mentioned other big US tech companies, which are riding the prospect of a tightening rate cycle that could ease in response to the banking sector's woes. The Nasdaq has rebounded strongly in recent sessions.

  • First Republic (-66%): The 14th largest American bank paid a high price for the markets' distrust of the sector. So much so that eleven of its rivals, led by JPMorgan Chase with the blessing of the authorities, have committed to provide it with $30 billion to stop the bleeding and avoid a fourth resounding bankruptcy in a month.

  • Credit Suisse (-26%): The SNB came to the rescue of the second Swiss bank, which allowed it to rebound by 19% on Thursday. But the respite was short-lived because the market no longer has confidence in the institution. Rumors of a merger with UBS under the leadership of the Swiss government have circulated, but the bank does not seem to be in a hurry to rescue its ailing rival.
  • Keycorp (-26%): Behind First Republic, other US banks are also in trouble. Keycorp is one of them, with a 27% plunge at the beginning of the week, mitigated by surges in the following sessions. 

  • Shell (-13%): Oil has fallen heavily lately as turmoil in the banking sector has heightened fears of recession. Brent crude oil is flirting with USD 75 per barrel, a drop of more than 11% in one month. Over a year, the black gold lost almost a quarter of its value.
Chart Commodities
Energy: The damage is done. Even though the Swiss National Bank came to the rescue of Credit Suisse, this second warning shot from the banking system exacerbates fears of an economic slowdown, sending risky asset prices into a tailspin, including oil. An economic slowdown obviously means less oil consumption, explaining the excess weakness in crude prices mid-week. The increase in weekly inventories in the United States has further affected the morale of investors. In terms of prices, Northern European Brent and US WTI prices lost ground at USD 75 and USD 69 per barrel respectively. In Europe, natural gas is stabilizing at around 43 EUR/MWh for the Dutch benchmark.

Metals: The latest economic data from China, which takes the pulse of the country's activity in the first two months of the year, is rather encouraging. Industrial production and household consumption are picking up after a complicated 2022, completely locked in by Beijing's restrictive health policies. However, these elements are for the time being relegated to the background due to renewed fears of recession. Base metal prices lost ground this week. On the London Metal Exchange, a ton of copper is trading at around USD 8,500, while aluminum is trading at 2,260. Gold, on the other hand, is making a comeback with a sharp rise of almost 3% for the week. The barbarian relic therefore recorded its third consecutive week of increase and in a very nice way since its price went from 1815 to 1930 USD during this period.

Agricultural products: Negotiations on Ukrainian grain exports are back on the financial table. Moscow and Kiev do not agree on the duration of the extension of the agreement. It will be 60 days for Russia, while Ukraine is calling for 120 days of security, a duration in line with the two previous agreements. Uncertainty rises a notch and this is felt on the price of wheat in Chicago, which climbs to 705 cents per bushel.
Chart Commodities
Atmosphere: No wedding and three funerals. A lot has happened since our last weekly update. In the meantime, American authorities have closed two banks and orchestrated the rescue of a third. Then the Swiss National Bank came to the rescue of a Credit Suisse in a sorry state to avoid a "bank run". Investors seem to think that the monetary tightening policy is history because they put the risk of weakening the financial sector above the inflationary risk. In the end, stocks did not fall as much as might have been feared, although there was a big swell during the week. As for the bond market, it soared with the drop in yields, as you will read below, with our analysis of the position of central banks, a few days before a major decision by the Fed on its rates.
Currencies. The ECB's monetary tightening, which did not deviate from its strategy despite the banking turmoil, gave the euro a bit of a boost, returning to USD 1.0633. The rebound was not more impressive, however, because the markets are still waiting for the Fed to make a decision on its own policy less than a week away. There is also some wait-and-see attitude with the Swiss franc and British pound... because the SNB and BoE are also on deck next week. EUR/CHF is at 0.9867 and EUR/GBP at 0.8754.
Rates. The European Central Bank has, as previously communicated, effectively raised its key rates by 50 basis points to 3.50%. The next step seems to be less clear as Christine Lagarde did not want to give a precise framework for a possible continuation - or not - of the interest rate hike cycle. The members of the committee are hiding behind the next publications of economic indicators. Admittedly, in a context where bank failures are once again making headlines, it is hardly surprising that the ECB prefers to leave itself some room for maneuver. Next week, all eyes will be on the U.S. Federal Reserve, whose monetary policy decision is expected on Wednesday. According to the latest consensus, a 25 basis point hike should be unanimously supported. However, the Fed is in a difficult position. After having told investors that it was making the fight against inflation its battle horse, a status quo could be particularly badly interpreted. Beyond the loss of credibility, which is already well underway, it would be feeding those who think that a systemic banking crisis, a la 2008, is brewing. In this sense, the technical configuration of interest rates is also telling: US and German 10-year yields are close to turning points at 3.35% and 1.99% respectively. A break of these levels could be interpreted as a tangible sign of a coming recession. 
Cryptocurrencies. Against the tide of banking chaos, bitcoin is up 18% this week and is exploring new highs over the year 2023, hovering around $26,200 at the time of writing. With hopes that the US central bank will raise policy rates at a slower pace than expected, risky assets, including bitcoin, are benefiting. For the most ardent supporters of Satoshi Nakamoto's creation, the rise of bitcoin amidst banking tensions proves that it could be a safe haven. Nevertheless, the digital currency is still trading 62% below its November 2021 all-time lows of $69,000. 
Timeline. In chronological order, on Tuesday we will have the German ZEW index and a speech by Christine Lagarde. Wednesday, UK inflation and the Fed's rate decision. On Thursday, monetary policy decisions from the SNB and the BoE, plus weekly US unemployment figures. Then on Friday, the March flash PMI indices for the major economies and US durable goods orders.
Historical Chart
From rout to flight
The last few weeks have been particularly turbulent following the recent bankruptcies of the American banks Silicon Valley Bank and Signature Bank. Fear gripped traders who massively sold banking stocks fearing a systematic contagion to the whole sector. Credit Suisse and First Republic Bank were next on the list but were saved in extremis by the Swiss central bank for one and a panel of eleven other banks for the other. The end of the week was calmer following reassuring speeches by European and American central bankers. Next week, there will be a few more earnings reports including Nike and RWE on Tuesday as well as Accenture and General Mills on Thursday.
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*The weekly movements of indexes and stocks displayed on the dashboard are related to the period ranging from the open on Monday to the sending time of this newsletter on Friday.
The weekly movements of commodities, precious metals and currencies displayed on the dashboard are related to a 7-day rolling period from Friday to Friday, until the sending time of this newsletter. These assets continue to quote on weekends.