Frankfurt (Reuters) – Shortly before the interest rate decision by the US Federal Reserve, there is restraint on the stock exchanges.
The German leading index Dax and its European counterpart EuroStoxx50 were half a percent higher on Wednesday after a weak start at 15,269 and 4204 points respectively. The most important US indices were just in the red. Investors wondered whether the Fed would take its foot off the gas when it made its interest rate decision in the evening. “For about two weeks there has been a heated discussion about how the US Federal Reserve should react to the bankruptcy of the Silicon Valley Bank (SVB),” says IG market strategist Christian Henke. “Will there be a pause in interest rates to avoid further damage to the banking system, or just small doses of interest rate hikes?” Investors should weigh every word Fed Chair Jerome Powell says. The current interest rate range is between 4.50 and 4.75 percent and many economists see a small quarter point increase as a likely scenario.
FEARS ABOUT BANKS OVERCOME FOR THE FIRST TIME
The fear of a broader crisis following problems at financial institutions such as Silicon Valley Bank and Credit Suisse seemed to have been overcome for the time being. The European banking index rose by one percent. Big US banks like JP Morgan, Morgan Stanley and Citi were up. The VDax volatility index, which measures investors’ nervousness, fell by 7.5 percent. “Right now we feel like we’re taking one day at a time. Every day that goes by without drama brings us closer to the point where we can put the mini-banking crisis behind us,” said trading house analyst Craig Erlam Oanda.
The US regional banking sector, on the other hand, remained under pressure. Pacific Western stood out with a price loss of up to 11.5 percent to $ 10.80. The institute has explored a capital increase with potential investors and claims to have secured $ 1.4 billion from the investment company Atlas Partners. The struggle for further financial help from the First Republic Bank also made investors nervous. The US Regional Bank failed to hold Tuesday’s recovery, falling 7 percent to $14.66.
In the commodity markets, investors stayed on the sidelines. North Sea Brent crude oil and US light oil WTI were just down at $75.29 and $69.59 a barrel, respectively. The price of the precious metal gold was listed 0.2 percent higher at $ 1943 per troy ounce.
PROPERTY VALUES FALL
In the case of individual values, real estate values flew out of the depots. Vonovia dived in the Dax by 4.3 percent to EUR 17.77 after the Morgan Stanley analysts downgraded the stock to “underweight” from “equal weight”. Aroundtown in the MDax lost 9.2 percent to a record low of 1.67 euros. LEG and TAG Immobilien each fell by around three percent. According to Morgan Stanley, the risks that companies will have to tap the capital markets are increasing throughout the European real estate sector.
In the US, on the other hand, the prospect of a cash injection ignited the price rocket at Virgin Orbit. The shares of the space company rose by almost 50 percent. According to documents, Texas venture capitalist Matthew Brown is ready to put $200 million into billionaire Richard Branson’s space company. Virgin Orbit announced that it would resume operations on Thursday and start preparations for a next space flight attempt. In January, a first attempt to launch a rocket into orbit failed due to technical problems.
(Report by Zuzanna Szymanska and Anika Ross, edited by Ralf Bode. If you have any questions, please contact our editorial team at [email protected] (for politics and the economy) or [email protected] (for companies and markets) .)