The calm after the storm. After two turbulent sessions, European markets rebounded, rebounding 1.86% in Paris, 1.83% in Frankfurt and 1.17% in London. On Wall Street, the Dow Jones took 1% while the Nasdaq index took over more than 2%.
“For the moment, the markets seem to continue to calm down and European investors, in particular, are again more inclined to buy (…). Each positive news currently acts as a balm on the soul of the market participants”, explains Andreas Lipkow, independent analyst.
The disruptions experienced by the American banking sector following the bankruptcy of Silicon Valley Bank (SVB) should have a limited impact on European establishments, which are organized differently, according to the American financial rating agency Moody’s. US inflation slowed further in February to 6% year on year, its lowest level in nearly a year and a half. It also decelerated over one month, to 0.4%, again in line with analysts’ expectations.
“A more cautious approach” to be expected for the Fed
But economists are worried about inflation excluding food and energy prices, which rose again over one month, to 0.5% against 0.4%. “At a time of market turmoil, reading the inflation figures complicates the task of the US Federal Reserve (Fed), which must perform a balancing act to both lower inflation and preserve the stability of the banking system,” comments Edoardo Campanella, economist at UniCredit.
According to him, “the stress in the banking system has clearly shifted the balance of risks in favor of a more cautious approach” at the next Fed meeting in a week. Investors who were still wondering last week whether the Fed would raise rates by 25 or 50 basis points due to the resilience of the job market and inflation, are now considering 25 points or even a pause in the monetary tightening.