(Bloomberg) — European stocks staged a partial rebound on Thursday as bank shares rallied after Credit Suisse Group AG said it would borrow money from Switzerland’s central bank and seek to repurchase debt.
Most Read from Bloomberg
The Stoxx Europe 600 index climbed 0.8% after yesterday’s near-3% plunge as the news from Credit Suisse provided a measure of calm for jittery investors. A gauge of bank stocks climbed 2%, recovering some of yesterday’s 6.9% loss. Credit Suisse shares soared as much as 40%. The embattled Swiss lender has arranged to borrow as much as 50 billion francs ($54 billion) from a Swiss National Bank liquidity facility and will offer to buy back up to three billion francs of dollar- and euro-denominated debt.
The Swiss franc rebounded on the news in volatile trade after a sharp selloff Wednesday. The euro strengthened ahead of an expected interest rate increase from the European Central Bank later Thursday, with more investors now positioning for a 25 basis point move after earlier expectations for double that.
The Treasury 10-year yields edged higher following steep declines in the previous session. Bond across Europe gained, with the German 10-year yield up 10 basis points. An index of the dollar fell.
Contracts for the S&P 500 pared an early advance to trade little changed after the index fell 0.7% Wednesday. Tech stocks offered a bright spot as traders began to forecast interest rates climbing less than previously anticipated. Nasdaq 100 futures advanced Thursday after the benchmark posted its third day of gains on Wednesday as Netflix Inc., Meta Platforms Inc., Microsoft Corp., and Amazon.com Inc. rallied.
Selling in bank stocks dragged the KBW Bank Index, one of the broadest measures of the US banking system, down more than 3% Wednesday. First Republic Bank shares fell more than a fifth after being cut to junk by two credit firms, dragging its decline over the past week to more than 70%.
Traders were almost evenly split on whether the Federal Reserve will increase interest rates when it meets next week. Market pricing now suggests the Fed will soon pivot and will cut rates by as much as 1% by the end of the year.
“This episode is not the same as 2008. It is not a credit crisis, but an asset crisis,” said Nicholas Ferres, chief investment officer of Vantage Point Asset Management. “The challenge now that has been uncovered is the mark-to-market fantasy of venture capital, private equity and commercial real estate assets.”
Elsewhere in markets, oil rose from the lowest close in 15 months after a three-day rout started by the US banking crisis and accelerated by options covering. Copper and aluminum also advanced. Gold traded near a six-week high.
Key events this week:
-
Eurozone rate decision, Thursday
-
US housing starts, initial jobless claims, Thursday
-
Janet Yellen appears before the Senate Finance Committee, Thursday
-
US University of Michigan consumer sentiment, industrial production, Conference Board leading index, Friday
Some of the main moves in markets:
Stocks
-
The Stoxx Europe 600 rose 0.8% as of 8:26 a.m. London time
-
S&P 500 futures rose 0.1%
-
Nasdaq 100 futures rose 0.4%
-
Futures on the Dow Jones Industrial Average were little changed
-
The MSCI Asia Pacific Index fell 1%
-
The MSCI Emerging Markets Index fell 0.7%
Currencies
-
The Bloomberg Dollar Spot Index fell 0.2%
-
The euro rose 0.4% to $1.0622
-
The Japanese yen rose 0.5% to 132.69 per dollar
-
The offshore yuan fell 0.1% to 6.9023 per dollar
-
The British pound rose 0.3% to $1.2097
Cryptocurrencies
-
Bitcoin rose 1.2% to $24,671.96
-
Ether rose 0.2% to $1,656.99
Bonds
-
The yield on 10-year Treasuries advanced two basis points to 3.48%
-
Germany’s 10-year yield advanced 10 basis points to 2.23%
-
Britain’s 10-year yield advanced seven basis points to 3.39%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson.
(An earlier version of this story was corrected to show that Credit Suisse is seeking to buy back debt.)
Most Read from Bloomberg Businessweek
©2023 Bloomberg L.P.
