The Paris Stock Exchange fell 3.58% on Wednesday, its worst session since March 2022.
Western stock markets relapse. The markets fell sharply on Wednesday March 15, after the rebound of the previous day: Paris fell by 3.58% and London by 3.83%, signing their worst session since March 2022. Frankfurt gave up 3.27% . The European banking sector index (Stoxx 600 Banks) plunged nearly 7%. US markets were in the red: the Dow Jones fell by 1.77%, the Nasdaq index by 0.95% and the broader S&P 500 index by 1.56% shortly after the European close. The VIX index, which measures market volatility, jumped more than 20% on Wednesday, indicating nervousness among investors.
Oil at its lowest since December 2021, sharply falling rates, rising dollar, wave of volatility: the signs of great nervousness among investors could be read on all markets. Equities had held up particularly well over the past four months when central banks raised interest rates to contain strong and stubborn inflation, but uncertainty set in last week after several US bank failures, including that of the emblematic Silicon Valley Bank (SVB).
The worst fall in history for Credit Suisse
On Wednesday, fears of contagion risk were accentuated with the plunge in Credit Suisse shares (-24.24% at the close, the worst fall in its history), which came after its main shareholder, the Saudi National Bank, ruled out investing more to prop up the struggling bank for two years. The day before, Credit Suisse had recognized “substantial weaknesses” regarding its internal controls for financial reporting.
In a domino effect, European banking stocks collapsed by more than 10% for Deutsche Bank, Commerzbank, Société Générale, BNP Paribas, Banco Sabadell and Banca Monte dei Paschi. In the United States too, medium-sized players and regional banks were affected, in particular the Californian First Republic (-20.19%) and PacWest (-18.40%). But the tide was rising to some behemoths in the sector in the United States, such as Capital One (-4.96%), Citigroup (-6.05%) and Wells Fargo (-4.29%).