After a double-test of the 7,170 intraday level, the CAC40 tried to save the 7,230 support level: the decline was reduced from -2% to -1.55% (towards 7,200), but the undertaking proved complicated.

Wall Street could help, as the Dow Jones came out of the red (+0.1%) and the S&P500 (-0.3%) erased half its losses in 1 hour.


But nervousness remains palpable, with fears of default by two US banks (one of which - SVB.Financial - is giving up on recapitalization, and the other - Silvergate - which specializes in cryptos - is reportedly throwing in the towel).

Investors' doubts about the health of the US financial system, and the sustainability of current debt levels, are resurfacing.

Silicon Valley Bank (SVB) has just announced that it has failed to launch a capital increase to bail itself out after suffering heavy losses on the sale of part of its bond portfolio ($1.8 billion) in an attempt to free up liquidity.

The stock of this 40-year-old company, which helps finance Californian technology companies, plummeted by over 60% last night at the close on Wall Street.... and remains suspended this Friday (despite the fact that it can no longer cope with withdrawals and return customers' money, which is the very definition of bankruptcy).
It is dragging First Republic Bank (-50%) and Signature Bank (-31%) in its wake, which could in turn face major withdrawals ('bankrun').
The U.S. "regional banks" sector ETF had its worst week since autumn 2008, with a weekly decline of almost -10%.

Also in the banking sector, Silvergate Capital, a cryptocurrency-focused institution, continued its slide (-42%) yesterday after announcing its intention to go into liquidation shortly.

These announcements sent US equity markets tumbling on Thursday, as investors feared a domino effect similar to that which precipitated the 2008 financial crisis.

Over the past 48 hours, financial stocks in particular have been under attack, as investors seek to reduce their positions in those sectors most sensitive to current uncertainties.
Bank of America shares have shed over 6% (-3% today), Citigroup around 4% and Morgan Stanley close to 3%.

These fears have logically led to a rush into less risky assets, such as gold (+2.7% to $1,864) and government bonds.
Interest rates are also easing spectacularly, as experts anticipate action by the FED on the interbank market to avoid a freeze (in a climate of mutual suspicion), which would add liquidity.
Our OATs are down -17.5pts at 2.965%, Bunds -18pts at 2.461% and Italian BTPs -11pts at 4.28%.

Across the Atlantic, the easing was even more spectacular: the '10-yr' yield fell -22pts to 3.00%, the '30-yr' yield also dropped below 3.705%, and the '2-yr' yield erased -25pts to 4.65%.

The eagerly-awaited 'NFP' published at 2.30 p.m. is more of a non-event.

The US economy created 311,000 jobs: this marks a clear slowdown after January's sharp rise (517.000 jobs created), but this is 45% more than the 215,000 new jobs expected.
Wall Street is trying to reassure itself with the unemployment rate at 3.6% and wage growth stabilizing (+0.2%).

Barclays' economists were right to issue a serious warning yesterday.
'We believe that solid figures of around 200.000 job creations would be sufficient to trigger a rate hike of 50 basis points at the end of the next FOMC meeting', warned the British bank's teams.
But for the time being, the 'SVB' affair is attracting all the attention, and the big question is whether this is an isolated incident, or the tip of the iceberg of a more systemic problem, given the climate of general over-indebtedness and the bursting of the real estate bubble.
Note that the dollar is taking a battering, with a sharp -1% loss around 1.0690/E, which would see it end the week at its lowest (and even its lowest since February 20).

Within the CAC40 and SBF-120, banks are suffering, with Sté Générale -5%, BNP-Paribas -4% and Crédit Agricole -3.5%, not forgetting Scor with -5.5%.


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