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Credit Suisse Shares Soar After Swiss National Bank Bailout; ECB Decision Ahead of Fed Meeting

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On Thursday, Credit Suisse (CS) shares soared by over +7% in pre-market trading after the Swiss lender announced it would borrow up to $54 billion from the Swiss National Bank under a covered loan facility and a short-term liquidity facility.[0] The move came after the bank’s largest investor, Saudi National Bank, said it could not provide more financial assistance on Wednesday.[1]

The news follows the dramatic rescue of Silicon Valley Bank and Signature Bank by U.S. regulators on Sunday, raising concern about the stability of the global banking system.[2] U.S.-listed shares of Credit Suisse had fallen over -13% on Wednesday, sending stock markets tumbling in the U.S. and around the world.[2]

On the economic data side in the U.S., the Commerce Department reported retail sales dropped 0.4% in February, in line with economist expectations.[1] Meanwhile, the Producer Price Index (PPI), which measures what suppliers are charging businesses, fell 0.1% in an unexpected decline.[3]

First Republic Bank (FRC) also reportedly is exploring options, including putting itself up for sale, after its stock plunged 30% before the open on Thursday and 21% on Wednesday after S&P Global slashed its credit rating by four notches to junk status.[4]

Snap (SNAP), the parent company of Meta and Snapchat, rallied 6%, while Meta rose 1.5% following a Wall Street Journal report that the Biden administration said competitor TikTok could be banned unless it is sold by its Chinese owner, ByteDance.[5]

Shares of Adobe Systems Incorporated (ADBE) rose by more than 6% in pre-market trading after the firm released favorable Q1 results and increased its yearly guidance.[1] Meanwhile, the 10-year Treasury yield fell 7 basis points to 3.42%, and the 2-year Treasury was down by around 10 basis points to 3.292%.[4]

Just prior to the U.S. markets opening, the European Central Bank is expected to make its latest policy announcement.[6] The ECB was previously believed to be increasing rates by 50 basis points until a few days ago.[4] It is now more probable that a quarter-point shift will occur.[4] Before the Federal Reserve convenes for its policy meeting next week, the European Central Bank has already made its decision; the likelihood of rate hikes by the Fed is also in question.[4]

Initial jobless claims are expected to be 205,000, compared to last week’s figure of 211,000.[7]

0. “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

1. “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

2. “Credit Suisse shares soar after the bank secures a $54 billion lifeline” NPR, 16 Mar. 2023, https://www.npr.org/2023/03/16/1163837728/credit-suisse-banking-stock-markets

3. “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

4. “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/

5. “Stocks making the biggest premarket moves: Credit Suisse, Snap, Adobe, PagerDuty & more” CNBC, 16 Mar. 2023, https://www.cnbc.com/2023/03/16/stocks-making-the-biggest-premarket-moves-.html

6. “European markets live updates: stocks, data, news and earnings” CNBC, 16 Mar. 2023, https://www.cnbc.com/2023/03/16/european-markets-live-updates-stocks-data-news-and-earnings.html

7. “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

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