European stock markets ended the week lower on Friday, and Wall Street was also in the red in late morning New York, in a new bout of financial market fever, particularly in the banking sector, as the volatile session was marked by the "four witches", the expiry of several futures contracts.

In Paris, the CAC 40 ended down 1.43% at 6,925.4 points in heavy trading, with a session high of 7,104.75 points and a session low of 6,895.73 points. The British Footsie fell by 1.01% and the German Dax by 1.33%.

The EuroStoxx 50 index gave up 1.26%, the FTSEurofirst 300 1.22% and the Stoxx 600 1.21%.

Over the week as a whole, the CAC 40 lost 4.08% and the Stoxx 600 3.85%, in a climate of mistrust towards the banking sector since the rout at the end of last week of the US regional banks Silicon Valley Bank (SVB) and Signature Bank, followed by the mid-week collapse of Credit Suisse.

Far from reassuring, the $30 billion in aid provided by the major US banks to the regional First Republic Bank, victim of a crisis of confidence among investors and customers, rekindled panic on the markets on Friday.

Investors now fear a deep liquidity crisis for US regional banks and the impact of a Credit Suisse insolvency, as US banks have requested a total of $153 billion in emergency liquidity from the US Federal Reserve (Fed) in recent days, more than was released at the height of the 2008 financial crisis.

This reflects "funding and liquidity pressures on banks, due to weakening depositor confidence", commented rating agency Moody's, which this week downgraded its outlook on the US banking system to negative.

Meeting at an unscheduled summit, the supervisors of the European Central Bank (ECB) said on Friday, however, that they saw no contagion from the current turbulence to eurozone banks, according to one source, while Banque de France Governor François Villeroy de Galhau assured that the ECB's 50-point rate hike on Thursday was a message of confidence to banks.

"Despite all the measures taken by the Fed, the Treasury, the BoE, the BNS and US banks to stabilize the situation this week, market distress persists", summarized Craig Erlam, market analyst at OANDA.

The day of the "four witches", the third Friday in March, also accentuated market volatility, with heavy trading volumes. The US Vix index jumped 9.26% to 25.12 points, and its European equivalent ended up 12.7% at 30.03 points.

VALUES IN EUROPE

Virtually no major compartment of the European stock market escaped risk aversion. The banks index (-2.57%) was the biggest sectoral decliner, posting an 11.53% fall for the week as a whole.

French banks BNP Paribas and Crédit Agricole were down by 1.95% and -2.29% respectively, while elsewhere in Europe, Credit Suisse fell by 8.01%, Santander by 4.64%, HSBC by 2.86% and Commerbank by 3.47%.

ON WALL STREET

At the time of closing in Europe, the Dow Jones was down 1.11%, the Standard & Poor's 500 1.04% and the Nasdaq 0.76%, with most sectors in the red.

The finance sector lost 3.02% and the banking sector 4.21%, with First Republic plunging 26.88%, PacWest Bancorp 16.15% and Western Alliance 18.34%.

The major US banks, JPMorgan, Citigroup and Wells Fargo, fell by 2.94% to 3.63%.

In a tense market environment, Fedex stood out with an 8.27% jump on the back of an increase in its annual profit forecast.

INDICATORS OF THE DAY

The OECD raised its forecast for global GDP growth to 2.6% this year and 2.9% in 2024, but stressed that the economy remains fragile.

Eurozone inflation was confirmed at 8.5% in February by Eurostat.

US household morale has deteriorated against all expectations since the beginning of March, according to the first results of the University of Michigan survey, while US industrial production posted zero growth in February after contracting by 0.2% the previous month.

RATES In a volatile market, the rush to safe-haven assets led to a fall in bond yields.

The German two-year ended down around 13 basis points, at 2.43%, and the ten-year, which fell to its lowest level since early February, ended down almost 12 basis points, at 2.12%. Over the week as a whole, with a drop of 41 points, it recorded its biggest fall since 1987, when it was still at 2.77% at the beginning of the month.

In the United States, ten-year and two-year Treasuries yields each fell by around 16 points to 3.41% and 3.96% respectively.

FOREIGN CURRENCIES The dollar weakened by 0.5% against a basket of reference currencies, with some traders fearing a recession in the event of a mistake by the Fed, which meets next week. US President Joe Biden also called on Congress to strengthen the powers of banking regulators.

The euro climbed to $1.0665 (+0.57%).

OIL

Oil prices, which could lose more than 10% over the week as a whole, are heading for their steepest weekly decline amid fears about the banking sector.

On Friday, Brent crude lost 2.52% to $72.82 a barrel, and West Texas Intermediate (WTI) 2.6% to $66.57.

METALS

The banking shock buoyed safe-haven gold, which gained 2.32% to $1,963.69 an ounce, heading for its best weekly performance in four months.

(Written by Claude Chendjou, edited by Jean-Stéphane Brosse)

by Claude Chendjou