Credit Suisse Shares Soar +7% After Tapping Central Bank for $54B and Other Market News
Credit Suisse shares soared by over +7% in pre-market trading on Thursday, a day after investors sent the stock crashing over -30% due to waning investor confidence.[0] The Swiss banking giant said it will tap its central bank for 50 billion francs ($54 billion) to bolster its liquidity and launch an offer to buy beaten-up debt.[1]
The move comes as other banks have also been forced to draw on central bank reserves to stave off the effects of the COVID-19 pandemic on the global economy. U.S. regulators had to rescue Silicon Valley Bank and Signature Bank on Sunday, while Saudi National Bank has been unable to provide further financial support to Credit Suisse due to regulatory restrictions.
Meanwhile, the U.S. Initial Jobless Claims data will be reported today, with economists estimating the figure to be 205K, compared to last week’s value of 211K.[2]
Shares in other companies have also reacted to the news. Snap (SNAP) 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.[3]
Shares of Adobe Systems Incorporated (ADBE) rose more than 6% in pre-market trading following the company's release of positive results for the first quarter and an increase in its yearly forecast.[4]
The Federal Reserve is expected to announce its latest policy decision shortly before U.S. markets open.[5] Until a few days ago, the Fed was seen hiking rates by 50 basis points.[5] However, a quarter-point move may be more likely now.[5] Prior to the Federal Reserve's policy meeting next week, the ECB has made its decision, casting doubt on the possibility of rate hikes by the Fed.[5]
On Wednesday, Goldman Sachs economists revised their economic growth forecast for 2023 downwards, reducing it by 0.3 percentage points to 1.2%.[6] The experts highlighted the decrease in loans from smaller and medium-sized banks, as well as the disruption in the wider financial environment.[7]
It has been reported that First Republic Bank (FRC) is looking into various possibilities, including the possibility of selling itself.[5] Prior to the market opening, FRC stock experienced a 30% drop, and other regional banks followed suit.[5] On Wednesday, First Republic saw a decrease of 21%, resulting from S&P Global lowering its credit rating by four levels to non-investment grade.[5]
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. “Credit Suisse shares jump as Swiss banking giant says it will borrow from SNB and buy back debt” MarketWatch, 16 Mar. 2023, https://www.marketwatch.com/story/credit-suisse-shares-jump-after-saying-it-will-borrow-from-snb-and-buy-back-debt-27a46b20
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. “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
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. “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/
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
