Credit Suisse shares jump over 25% after a $54 billion SNB loan eases jitters, US stock futures stabilize
- Credit Suisse stock jumped Thursday after the SNB agreed to loan the banking giant $54 billion.
- The Swiss lender's Zurich-listed shares rose over 25%, reversing on big declines in the prior session.
The Swiss bank's Zurich-listed shares have since pulled back somewhat, and are now up 25.4% at 2.13 Swiss francs ($2.29).
US-listed shares in the financial giant were 6.9% higher at $2.31 at last check.
Credit Suisse's shares are reversing their huge selloff Wednesday when they closed Wednesday down 14% after tanking more than 20% earlier in the session in US-listed shares. The declines came after its biggest shareholder, the Saudi National Bank, said it wouldn't provide any more financial support to the lender.
The drop in Credit Suisse's share price came at a turbulent time for the global banking sector, after Silicon Valley Bank, Signature Bank, and Silvergate Capital all folded in recent days.
On Thursday, the major US stock indexes wavered between gains and losses in premarket trading. Futures on the Dow Jones Industrial Average were down 0.2% at last check, while those on the S&P 500 fell 0.12%. Nasdaq futures fared better, up 0.24%.
"For now, the move has restored a little stability to global markets, with the S&P 500 regaining ground, once it appeared the Swiss National Bank was standing by to help," Susannah Streeter, head of money and markets at Hargreaves Lansdown said.
"Investors are trying to swim in a sea of red, as worries ripple around about where the next weakness in the global banking sector will rear up," she added.
The SNB lifeline came amid investor fears Credit Suisse will default on debt.
"Credit Suisse is taking decisive action to pre-emptively strengthen its liquidity by intending to exercise its option to borrow from the Swiss National Bank," he company said in a statement.
It said the borrowing will be made under a covered loan facility and a short-term liquidity facility. It also said the fresh cash injection would help its "core business and clients."
Looking ahead, investors are watching for the European Central Bank's rate hike decision, due later Thursday. Traders were expecting a promised 50-basis point increase, but in light of the banking turmoil, expectations have fallen to see a smaller 25-basis point hike.
"Dr. Doom" economist Nouriel Roubini has flashed a warning signal on Credit Suisse, saying it could go bust if the ECB follows up on its 50-basis point rate hike.
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