Wall Street Turns Red After the ECB Rate Hike And Banking Crisis
All the main indexes of Wall Street turned red after the ECB introduced a new rate hike. The ECB rate hike came at a time when there was a fear of a global banking crisis.
The recent move by the ECB has also raised fears that even the Fed will continue with its policy of raising the interest rate for a long time.
On Thursday, the European Central Bank pushed a 50 bps rate hike and stayed on course to fight inflation.
ECB Doesn't Believe Banking Crisis Will Get Out Of Hand
The recent ECB decision shed some light on how the central bank views the current banking sector crisis. It appears that it is still committed to fighting the high inflation, and the recent banking sector issues will not get in its way.
Another interesting thing to note was that the central bank didn't provide any future guidance during the meeting. That's a sign that the central bank is keeping a close eye on the markets and doesn't want to provide any wrong clues.
Meanwhile, the FRC (First Republic Bank) shares dropped by 29.8% after news that the bank was considering a sale option. Similarly, PacWest Bancorp and WAL also lost 14.6% and 13.1%, respectively after the ECB decision.
If we look at some major US banks such as the Bank of America, Citigroup, and JPMorgan, all of them were down in the stock market.
However, Credit Suisse which is listed on the US stock exchange jumped to 0.5% after the bank succeeded in getting a credit line.
Now that the ECB meeting is out of the way, the focus will now be on the Fed meeting. For the most part, there are talks that the Fed will introduce a small rate hike as opposed to the market's expectations. But given how the ECB hasn't changed its policy, there's a chance that the Fed will also do the same.