US AND EUROPE EQUITY REMAIN NEGATIVE

The Dow finished over 380 points lower on Friday, while the S&P 500 and Nasdaq 100 lost 1.1% and 0.7%, respectively, as concerns over the banking sector turmoil kept investors on edge. First Republic Bank came under renewed heavy selling pressure, down nearly 33%, as the rescue attempt from larger banks, including JPMorgan Chase and Citigroup, offered only brief relief as worries persist that the infusion may not be enough to shore up the regional bank. Also, US-listed Credit Suisse finished 7% down, even after the bank received a CHF50 billion lifeline from the Swiss National Bank. This week, the bank sector turmoil helped big techs to gain $500 billion sending Microsoft and Alphabet shares more than 12% higher. On the week, Dow Jones lost 0.4%, while the S&P 500 and Nasdaq gained 1.5% and 4.3%, respectively.

European equity markets fell on Friday, with the benchmark Stoxx 600 down 1.2% as investors remained concerned about a potential banking crisis despite efforts in the United States and Europe to backstop troubled lenders. The Stoxx bank index dropped by more than 2.5% led by Credit Suisse (-8.2%). Domestically, the German DAX lost 1.3%, with Deutsche Bank falling 4.5% and the Commerzbank retreating 3.8%. Elsewhere, Santander dropped by over 4%, Swedbank by almost 4%, HSBC by nearly 3%, and Barclays by 2%.. For the week, Europe's bank index shed 11.5%, the most in a year.

Equities in London failed to hold their initial upside momentum on Friday, with the blue-chip FTSE 100 closing down 1% near a four-month low of 7,330 points, dragged by technology and financials shares. Worries worsen about the banking industry while fears mount that it could tip the economy into a recession as initial optimism fueled by bailouts on both sides of the Atlantic faded. Among single stocks, BT Group and Abrdn were among the biggest laggards, down over 5% each. Hence, the export-oriented FTSE 100 fell roughly 5.4% this week, the worst weekly performance since February 2022.

The CAC 40 index extended losses to close about 1.4% down at 6,925 in a volatile session on Friday, in line with its regional peers, amid concerns over further instability in the banking sector despite rescue efforts in the US and Europe. The focus is now turning to next Wednesday’s Federal Reserve decision, with many analysts anticipating a smaller 25 basis point rate hike after the ECB’s decision to go ahead with a 50 bps increase to tame too-hot inflation despite volatility in financial markets. Locally, further protests erupted again today in France, as President Macron will trigger special constitutional powers to raise the retirement age, bypassing Parliament which had not yet voted on the proposal. On the corporate front, the top loser was Renault (-5%), followed by Axa (-3.3%), Publicis Groupe (-2.9%), Veolia Environment (-2.6%), Engie (-2.5%), Carrefour (-2.4%) and Credit Agricole (-2.3%). For the week, the CAC 40 lost 4.1%, the sharpest decline since mid-September 2022.

The FTSE MIB index erased early gains and closed 1.6% lower at 25,495 on Friday, booking a 6.5% plunge on the week as investors displayed pessimism on whether recent liquidity injections for troubled banks may be enough to support contagion risks in the sector. Banks once again led the declines in the session, with Finecobank sliding 4% while major lender UniCredit sank 3.6%. While ECB supervisors claimed there were no contagion issues for banks in the currency bloc, investors continued to fret over the value of BTPs that Italian banks have classified as held to maturity, given that higher risk premiums in Italian bonds magnify the vulnerability of Italian banks' balance sheet. In the meantime, Eni outperformed the broader index following news that it made a 200 million barrel oil find in the Mexican Sureste basin.

The IBEX 35 cut earlier gains to fall below 8720 on Friday, tracking its European peers lower, as investors worried about a potential banking crisis after Credit Suisse collapsed again due to its funds flight. Adding to the bearish sentiment, was also the ECB's emergency meeting held today. Big financials all declined, with Banco Santander, BBVA, and Sabadell, falling by 4.65%, 3.49%, and 3.14%, respectively. The main laggard on the corporate, however, was Melia Hotels (-4.45%). Repsol was one of the few stocks to escape punishment, up by 1.35%, helped by oil prices recovery amid rumors of an OPEC intervention. On the week, the index lost 6.09%, the largest decline for the period in over a year.