The Paris stock market is about to post a 4% intraday spread!

What a "saloon door" sequence: after reopening almost at equilibrium, the CAC40 plunged -2%, to around 6,796 points, penalized by the heavy decline in the banking sector (with notably up to -7% on Société Générale and -5% on BNP Paribas) before starting a spectacular rebound of +3.8% in a straight line, to around 7,045ts (+1.7%).
Sté Générale returned to the green with +0.1%, BNP-Paribas posted +1.4% and AXA even gained 2.2% (the insurer said it had no exposure to debt issued by Crédit Suisse).

The rise was amplified as Wall Street got off to a good start to the April trading term: +0.6% on the S&P500, +1.1% on the Dow Jones), reassured by the coordinated action of the world's 6 largest central banks, which are joining forces to saturate the financial system with liquidity... in no-limit mode.
The FED, the Bank of England, the Bank of Canada, the European Central Bank (ECB), the Bank of Japan and the Swiss National Bank (SNB) today announced concerted measures to improve the supply of liquidity through permanent swap agreements (loans against collateral provided by banks) in US dollars.

Christine Lagarde has just declared that "financial tensions could temper demand and do some of the work that would otherwise have been done by a restrictive monetary policy: without these tensions, we would have indicated that further rate hikes were necessary".

This is a clever way of confirming that rate hikes are probably over, since they are no longer necessary.

And as if everyone had agreed, the FED has just issued a statement in the same vein: "the current turbulence could encourage a fall in inflation via a 'shock' to confidence. Consumers more timid in the face of banking stress, and job vacancies that find takers in the face of 'perceived' economic risk, would all point in the direction of less pressure on wages".

As for the primary source of 'stress', last night UBS announced its intention to buy Credit Suisse for 3 billion Swiss francs (around three billion euros), a move forced through by the Swiss banking authorities (FINMA) and the SNB.
The buyer UBS is being offered a credit line of ChF100bn plus $9bn loss assumption (the 'CS' carries $14.000bn in outstanding derivatives, with risk levels ranging from low to medium and high), after the merger has been taken over by the "state", i.e. the Swiss taxpayer.

Overall, and beyond Credit Suisse and the "regional banks", the weight of bad debts and the impact of rising interest rates are likely to penalize the most fragile banks, raising fears of further bankruptcies.

Given the mistrust currently surrounding European banks, tomorrow and Wednesday's meeting of the Federal Reserve's Monetary Policy Committee is almost a non-event.

Nevertheless, the markets seem to be anticipating a change of course on the part of the Fed, which should be anxious not to further destabilize a financial system already plunged into turmoil.

According to CME Group's FedWatch barometer, investors estimate a 48% probability of a status quo from the US central bank at the end of this week's FOMC meeting.

The remaining 52% expect a rate hike limited to 0.25 percentage points.

If the Fed were to raise rates by 0.5% - which seemed quite possible just a week ago - the markets could be seriously shaken," warns Steven Bell, chief economist for Europe at Columbia Threadneedle Investments.

The erratic movements of the CBOE's VIX volatility index (-3% on Monday)-often dubbed Wall Street's 'barometer of fear'-also point to wide market swings.

While some strategists maintain that the situation is not as serious as it was at the time of the 2008 financial crisis, markets are set for high volatility this week, with big swings in the balance.
On the interest-rate front, after easing sharply in the early morning (risk-off), scores are returning to equilibrium: the OAT is down 3pts at 2.6640%, while US T-Bonds are up 8pts at 3.487%, compared with a low of 3.29%... already 20pts of intraday volatility.
The Euro is recovering from its -1.3% fall this morning to $1.0630, and is now down just 0.5% at 1.0725... again, unusual volatility.

In French company news, Aéroports de Paris (ADP) announced a framework agreement with GMR Airports Infrastructure Ltd (GIL), its partner in the airport holding company GMR Airports Ltd (GAL), initiating a process that should lead to a merger between GIL and GAL in the first half of 2024.

Orpea announced on Monday that it had finalized the terms of the additional financing obtained from its main banking partners at the beginning of the month.

Orange is set to implement a collective redundancy plan covering around 700 positions in the Orange Business division, according to Le Monde and Les Echos. The plan is due to be presented to union representatives.

Lastly, GTT (Gaztransport and Technigaz) reports that, for the fourth year running, it has taken first place in the INPI's ranking of ETI (intermediate-sized companies) patent filers, with 57 patents published in 2022.


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