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Banking sector keeps stock markets under pressure - ECB interest rate decision in focus

International stock exchanges experienced another day of losses in the middle of the week. In particular, the European banking sector remained under pressure after the shares of Credit Suisse slumped to a new record low on Wednesday. The announcement that the Swiss National Bank (SNB) will support the major Swiss bank with up to 50 billion Swiss francs could ease the situation for the time being. 

Alessandro Fezzi, LGT
Reading time
5 minutes
Credit Suisse
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On the New York Stock Exchange, share prices remained under pressure yesterday and thus joined the negative guidance from Europe. The focus was on the turbulence surrounding Credit Suisse, which tumbled even more against the backdrop of bank failures in the US (Silicon Valley Bank). However, despite clear losses, the shares of the major US banks held up somewhat better than their European competitors. JPMorgan, Goldman Sachs, and other major banks lost around 5% or in some cases even more. The Dow Jones Industrial closed 0.87% lower at 31’874.57 points, although the losses could still be contained while trading. The S&P 500 fell by 0.75% to 3’891.93 points and on the Nasdaq, the indices even turned positive and gained about 0.4%. On the bond market, the yield on ten-year US government bonds fell again noticeably and is currently below 3.5% at 3.47%. 

Investors in Europe fared even worse. After the stock markets had still been friendly on Tuesday, the downward slide continued Wednesday. The Europe Stoxx 600 lost almost 3%. Once again, financial stocks were under pressure, losing almost 7% as measured by the Europe Stoxx 600 Banks Index. The trigger was the fall in the share price of Credit Suisse: The shares of the major Swiss bank slumped by up to 30% during the day and fell to an all-time low. Finally, they closed 24% lower.

Markets in the Asia-Pacific region fell for the most part on Thursday but were able to largely offset their losses over the course of the trading day. In Hong Kong, the Hang Seng Index fell about 1.5%, leading losses in the region. In Japan, the Topix fell 1.3% Thursday morning as trade data for February came in lower than expected. The Nikkei 225 slipped nearly 1%. 

In this uncertain market environment, the European Central Bank (ECB) must determine its future monetary policy course. This afternoon, ECB President Christine Lagarde will provide information on the latest interest rate decision. Before the collapse of Silicon Valley Bank shook the financial world, an interest rate hike of 50 basis points was considered as good as certain. Whether the European monetary authorities will stick to their tightening course now remains to be seen. 

Corporate news in focus today: Enel and Swatch Group present annual results, FedEx reports Q3 figures. 

Economic data in focus today: ECB interest rate decision at 14:15 (CET), followed by a press conference at 14:45. In the US, various data on the housing market are on the agenda (building permits, housing starts) as well as import and export prices and the Philly Fed index (both 13:30).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi,
Source: LGT Bank (Switzerland) Ltd.

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