Credit Suisse Secures Loan and Stocks Open Lower
Credit Suisse Secures Loan – U.S. stocks fell after Credit Suisse increased; the green up-pointing triangle tapped a lifeline from the Swiss central bank ahead of an interest-rate decision from the European Central Bank.
The S&P 500 slipped 0.5%, pointing to the index extending its decline a second day after it closed down 0.7% on Wednesday. The Dow Jones Industrial Average fell 0.5%, and the Nasdaq Composite lost 0.3%.
Stocks have come under pressure recently after the collapse of Silicon Valley Bank spurred concerns about the broader banking sector. Those worries have spread to Europe, with Credit Suisse at the center of a bank-stock selloff.
In response, Credit Suisse said it would borrow up to $53.7 billion from the Swiss central bank to pre-emptively strengthen its liquidity position.
Investors said that move eased some concern, with Credit Suisse shares jumping 20% Thursday. Other European bank stocks also rose, with Zurich-based Julius Baer up 5% and UBS and NatWest adding 3%. The pan-continental Stoxx Europe 600 index ticked up 0.3%.
“This reiterates that both in the U.S. and Europe, regulators are going to be pretty quick to step in—first with SVB and now with Credit Suisse,” said John Roe for The Wall Street Journal Print Subscription, head of multi-asset funds at Legal & General Investment Management. “It’s a reminder that when things start to go wrong, central banks are all over it trying to stop it from getting out of control.”
Credit Suisse Secures Loan
Still, this doesn’t necessarily mean that all concerns about the banking sector are alleviated, Mr Roe said. Investors are likely to be more cautious going forward, he added.
In premarket trading, First Republic plunged 29%. The San Francisco-based bank was downgraded to junk status Wednesday by both S&P Global and Fitch. Both rating companies pointed to the risk of deposit outflows.
The European Central Bank was set to announce its latest interest-rate decision at 9:15 a.m. ET. Markets expect a 0.25-percentage-point increase, a shift in views from last week when investors predicted a larger, 0.5-point rise.
“Markets are very uncertain about what the path is going to be for central bank policy. On the one hand, inflation remains very elevated. On the other hand, these issues in the banking market are a sign that higher interest rates do have costs,” said Kiran Ganesh for Bloomberg Subscription, a multi-asset strategist at UBS Global Wealth Management.
The yield on the benchmark 10-year Treasury note edged down, reaching 3.430% from 3.492% the day before. Yields rise when prices fall.
Social media company Snap climbed 6% premarket after the Biden administration threatened a possible U.S. ban on TikTok, a competitor video-sharing app.
Software firm Adobe rose 5% premarket after it reported better-than-expected quarterly revenue and raised guidance for some of its full-year targets. FedEx is scheduled to report earnings after markets close.
In Asia, significant benchmarks declined. The Shanghai Composite Index slipped 1.1%, and Hong Kong’s Hang Seng Index retreated 1.7%. Japan’s Nikkei 225 fell 0.8%.
The latest data on weekly jobless claims came in at 192,000, a slight decline from the week before and below economists’ expectations.