Today’s Stock Exchanges, May 2nd. Markets tested by First Republic’s bankruptcy. Eyes on inflation and central banks
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MILAN – The European stock exchanges appear cautious but without repercussions on the restart after May 1st and the Firste Republic affair, which ended with the bank being placed under administration by the Federal Deposit Insurance Corporation and the sale of the bulk of its assets (more than 100 billion dollars of deposits and 229 of assets) to JPMorgan, which will acquire it thanks to the sharing of the losses by the Fdic itself. The Jaimie Dimon-led bank will pay $10.6 billion to the FDIC, repay $25 billion in deposits from major U.S. corporate banks while eliminating a $5 billion deposit after the completion of the acquisition. The Fdic, on the other hand, will provide a new loan of 50 billion at a five-year fixed rate. Investors hope that this operation – which crowns the second largest American bank failure by size, after Washington Mutual in 2008, and which comes after the SVB and Signature cases – will put an end to the turbulence on regional banks. Wall Street reacted weakly last night but without any particular jolts, with the Dow and the Nasdaq down by 0.1%. Today futures are still uncertain on Wall Street, little moved for Europe. Here, above all, we look at the inflation data that will arrive during the day and will be the appetizer for the meetings of the Fed first and then of the ECB: on the table, new rate hikes.
Stable futures on Europe with eyes on the ECB
Stable futures for European equities after a tormented long weekend, with the story of the First Republic. All eyes rest on the ECB, called this week to raise rates again and in the meantime to release quarterly data on the banking sector which will show where the credit crunch is after the rate decisions. Also keep an eye on the data on the manufacturing PMI, as well as obviously the quarterly ones.
Oil prices slightly up in Asia
Oil prices stable on Asian markets, still below the threshold of 80 dollars a barrel. At the moment, contracts on Brent are sold at 79.3 dollars a barrel, up by 0.03%, while those on WTI are sold at 75.7 dollars, up by 0.10%.
HSBC, positive accounts in the quarter
Banking group HSBC announced a 274.8% year-on-year jump in net profit in the first quarter of 2023, driven by global interest rate hikes. From January to March, HSBC’s net income reached $10.327 billion, compared with $2.755 billion in the same period in 2022. The group’s pre-tax profits increased 210.9% year on year, from $4.144 billion to 12.886 billion. “Our excellent first quarter results demonstrate once again that our strategy is working,” said Group CEO Noel Quinn, noting that “profits were spread across our core geographies.” The sale of the retail banking business in France to My Money Group, controlled by the American fund Cerberus, is now “less certain”, says the group. “This is due to an unexpected increase in interest rates in France – the bank continues – which will increase the amount of principal requested by the buyer at the end of the operation”.
Asian stocks up
The Asian stock markets are proceeding in positive territory, driven by some quarterly results, they seem to have metabolized the slightly lower closure of Wall Street, conditioned by the bailout of First Republic Bank and by new fears for the stability of the regional banks. With the Chinese markets of Shanghai and Shenzhen closed for Labor Day, towards the end the Nikkei index in Tokyo marks +0.10%, while in Hong Kong the Hang Seng reaches +0.62%. The Kospi of Seoul was also positive with +0.70%.
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