The problems in the banking sector are making investors increasingly nervous again at the end of the week. On the so-called witches' Sabbath, when prices fluctuate more than usual, the stock markets went up and down. The shares of the problem children of the financial sector, Credit Suisse and the US regional bank First Republic, went to their knees again despite the support measures initiated.
The Dax and Euro Stoxx 50 plunged into the red on Friday afternoon, losing around one percent each to 14,805 and 4077 points. The US indices also came under pressure and lost up to 0.5 percent at the start of trading on Wall Street. "We're far from out of the woods," said Stuart Cole, an economist at asset manager EquitiCapital. Thursday's rally was more an expression of a breath of relief than a sign that something had fundamentally changed, he added.
It was also uncomfortable at the end of the week due to the expiry of options and futures on stocks and indices. On the third Friday of the third month of a quarter, there are often seemingly inexplicable price distortions – which is why stock market participants fall back on the image of dancing witches.
In addition, fears of a new financial crisis boiled up again after the collapse of California's Silicon Valley Bank (SVB). The parent company SVB Financial Group has now applied for creditor protection under Chapter 11. After initial gains, the European banking sector index slipped up to 2 percent into the red. Investors had initially dared to come out of cover when, after the ailing Swiss bank Credit Suisse, the US regional bank First Republic had also received a support package. A total of eleven major US banks such as JP Morgan and Citigroup have invested $30 billion in the smaller financial institution.
Deutsche Bank and Commerzbank lose
The package does not seem sufficient to investors to reduce the risks, said expert Victoria Scholar of the British online investment service Interactive Investor. First Republic's shares plunged about 19 percent. Credit Suisse also went downhill again. The shares fell by around ten percent to 1.84 francs. The situation remains tense, said Daniel Bosshard, analyst at Luzerner Kantonalbank. "Credit Suisse's basic problem remains the lack of client trust." The shares of Deutsche Bank and Commerzbank also fell by 1.9 and 2.8 percent respectively.
On the German stock market, Vonovia's shares turned negative following a dividend cut. The shares of Germany's largest real estate group lost 2.7 percent to 18.72 euros. The shares of rivals Grand City Properties and LEG Immobilien also crumbled by 5.4 and 1.3 percent, respectively. "Vonovia has not cancelled the distribution to shareholders and that has been well received, but the EUR 0.85 is below analysts' expectations," said a trader.
Meanwhile, expectations of smaller interest rate hikes as a result of banking worries supported the technology sector. Investors hoped that the largest central banks would raise interest rates more slowly in the fight against inflation in order not to put even more strain on the recently struggling financial institutions. Semiconductor manufacturers such as Infineon, STMicroelectronics and ASM International gained up to 2.7 percent.