A currency trader watches computer monitors near the screens showing the foreign exchange rates at a foreign exchange dealing room in Seoul, South Korea, on March 15, 2023.
| Photo Credit: AP
Renewed unease gripped world markets on March 15 as news that Credit Suisse’s largest investor said it could not provide the Swiss bank with more financial assistance sent its shares and broader European shares sliding once more.
Signs of calm and stability in banking stocks, which have tanked in the past week, following the collapse of Silicon Valley Bank (SVB), soon paved way for renewed selling as Credit Suisse shares fell to record lows.
Europe’s bank index has now seen more than 120 billion euros evaporate ($127.08 billion) in since March 8. The index was last down 6.4% at 1154 GMT. This dragged lower European shares 2.4%
Investors rushed back into safe-havens, with two-year German bond yields down over 30 basis points at 2.60%. Two-year treasury yield have tumbled 98 basis points in the last five days, the biggest drop since the week of Black Monday on October 19, 1987.
“The Credit Suisse share price is falling and government bonds are rallying on the back of that. Still very much driven by the perceived health of the banking sector, but this time in Europe,” said Antoine Bouvet, senior rates strategist at ING.
The European Central Bank is still leaning towards a half-percentage-point rate hike on Thursday, despite turmoil in the banking sector, given high inflation, a source close to its Governing Council told Reuters.
Markets are “spooked” by Credit Suisse headlines, said Richard McGuire, head of rates strategy at Rabobank in London.
This has caused the share price fall and the surge in short dated German bonds but he did not think this would affect central bank decision making.
“For today Credit Suisse is the dish of the day but we don’t think this will be a longer lasting trend,” he said.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%, having slid 1.7% on Tuesday. Japan’s Nikkei index was flat while an index of Japanese banks, which has slid 8% this week, jumped over 3%.
But U.S. equity futures fell sharply as European banking stocks tumbled in an ominous sign for the Wall Street open. U.S. stock futures fell by 1.6% at 1155 GMT.
Bruised U.S. bank stocks regained some ground on Tuesday aided by news that private equity and buyout giants were looking to scoop up some of SVB’s assets. That left investors hopeful that efforts to shore up confidence would avert a wider financial crisis.
London – FTSE 100: DOWN 2.3% at 7,462.86 points
Frankfurt – DAX: DOWN 2.7% at 14,830.83
Paris – CAC 40: DOWN 3.1% at 6,917.62
EURO STOXX 50: DOWN 3.0% at 4,053.04
Tokyo – Nikkei 225: FLAT at 27,229.48 (close)
Hong Kong – Hang Seng Index: UP 1.5% at 19,539.87 (close)
Shanghai – Composite: UP 0.6% at 3,263.21 (close)
New York – Dow: UP 1.1% at 32,155.40 (close)
Euro/dollar: DOWN at $1.0616 from $1.0735 on Tuesday
Pound/dollar: DOWN at $1.2071 from $1.2156
Euro/pound: DOWN at 87.93 pence from 88.29 pence
Dollar/yen: DOWN at 133.74 yen from 134.20 yen
West Texas Intermediate: DOWN 1.7% at $70.13 per barrel
Brent North Sea crude: DOWN 1.6% at $76.20 per barrel
