Credit Suisse shares jumped by over 32% on Thursday, reversing Wednesday’s slump, after the Swiss banking giant announced it would borrow up to 50 billion Swiss francs (£44bn) from the Swiss National Bank. The move came in response to a series of events, beginning with a warning from the bank’s largest investor – Saudi National Bank – that it could not provide more financial assistance. This sent shares of Credit Suisse plunging by as much as 30%.[0]
In a statement overnight, Credit Suisse said it would use a 50-billion-franc ($54 billion) facility from the Swiss National Bank in what it called “decisive action” to strengthen its liquidity. The announcement was welcomed by investors, as Credit Suisse shares soared in value.[1]
The news comes as U.S. markets were already under pressure due to the U.S. regulators’ Sunday intervention to rescue Silicon Valley Bank and Signature Bank. Initial jobless claims data was also reported today, with economists estimating this figure to be 205K, compared to last week’s value of 211K.[2]
Meanwhile, the Biden administration threatened to ban TikTok if China’s Bytedane doesn’t divest its stake in the video-sharing app, causing stocks such as Snap and Meta to rally.[3] Similarly, Adobe Systems Incorporated (ADBE) climbed over +6% in pre-market trading after the company reported upbeat Q1 results and lifted its annual guidance.[4]
On the economic data side, the Commerce Department said retail sales fell 0.4% over the last month, in line with the economist consensus complied by Bloomberg.[5] The European Central Bank is also set to announce its latest policy decision shortly before U.S. markets open.[3] Until a few days ago, the ECB was seen hiking rates by 50 basis points, and a quarter-point move may be more likely now.[3]
Additionally, Goldman Sachs economists Wednesday also lowered their 2023 economic growth forecast, reducing it by 0.3 percentage points to 1.2%.[6] Small- and medium-sized banks have reduced their lending and there has been disruption in the financial environment, according to them.[7] First Republic Bank (FRC) crumbled 21.4% after S&P Global Ratings downgraded the regional lender’s credit rating to junk status, saying “the risk of deposit outflows is elevated.[8]
0. “Credit Suisse shares surge after bank agrees £44bn lifeline – business live” The Guardian, 16 Mar. 2023, https://www.theguardian.com/business/live/2023/mar/16/credit-suisse-borrowing-liquidity-swiss-francs-central-bank-ecb-lagarde-jeremy-hunt-business-live
1. “Stock Market Today: Dow Futures Edge Down; Credit Suisse Shares Leap 20%” The Wall Street Journal, 16 Mar. 2023, https://www.wsj.com/livecoverage/stock-market-news-today-03-16-2023
2. “How Credit Suisse just unleashed a nightmare decision for the Fed and the ECB” Yahoo News, 16 Mar. 2023, https://news.yahoo.com/how-credit-suisse-just-unleashed-a-nightmare-decision-for-the-fed-and-the-ecb-093016411.html
3. “Dow Jones Futures Fall: Credit Suisse Taps Swiss National Bank; First Republic Dives On Sales Report | Investor’s …” Investor’s Business Daily, 16 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-rise-as-credit-suisse-taps-54-billion-from-swiss-national-bank/
4. “Stock Index Futures Mixed as Bank Jitters Weigh on Sentiment, ECB Decision in Focus” Barchart, 16 Mar. 2023, https://www.barchart.com/story/news/15111754/stock-index-futures-mixed-as-bank-jitters-weigh-on-sentiment-ecb-decision-in-focus
5. “Stock market news today: Stocks, yields fall amid Credit Suisse turmoil” Yahoo News, 14 Mar. 2023, https://news.yahoo.com/stock-market-news-today-live-updates-march-15-2023-114153589.html
6. “Credit Suisse Gets A Lifeline – Academy Sports (NASDAQ:ASO)” Benzinga, 16 Mar. 2023, https://www.benzinga.com/markets/cryptocurrency/23/03/31379378/credit-suisse-gets-a-lifeline
7. “A recession could come sooner on cooling bank lending” CNBC, 15 Mar. 2023, https://www.cnbc.com/2023/03/15/a-recession-could-come-sooner-on-cooling-bank-lending-.html
8. “Stock Market Today: Stocks Struggle on Credit Suisse, First Republic Bank Concerns” Kiplinger’s Personal Finance, 15 Mar. 2023, https://www.kiplinger.com/investing/stocks/stock-market-today-stocks-struggle-on-credit-suisse-first-republic-bank-concerns