Credit Suisse leads gains in banking shares, for now
After the Swiss National Bank stepped in to help Credit Suisse late last night, the reaction today has been a 28% climb in the stock at the start of trade.
IGTV’s Jeremy Naylor asks whether this is just delaying what some believe is the inevitable, or is it a positive turning point for the entire banking sector?
(Video Transcript)
EU banking stocks up
European banking stocks have risen at the start of the day's trade today after the Swiss National Bank (SNB) stepped in late last night to try and stave off a crisis at Credit Suisse.
Let's take a look at the statement that we saw released yesterday at the Swiss regulator Finma last night said the Swiss National Bank insisted that there were no indications of a direct risk of contagion for Swiss institutions due to the current turmoil in the US banking market. The Swiss Central Bank said it will provide this liquidity backstop. We learned overnight that Credit Suisse will borrow up to 50 billion Swiss Francs.
Credit Suisse executives held talks with representatives from the SNP and Finma throughout yesterday's session.
Share price chart
If we have a look at what happened and what has happened this morning, this is Credit Suisse stock. The long-term picture you can see the big loss of market capitalisation and record lows yesterday and today we've got the stock opening up 23.8%. And this has given a little bit of a fillip to other stocks around the region.
Yesterday's losses were around about a third of the total value of the business. That puts today's move into some sort of context. But the significance, I think, here is we are already off the highs today with 20 minutes into the European trading day. But I think if you look at other areas of the markets, it's interesting to see what's been happening there as well.
FTSE 350
Big losses yesterday for the FTSE 350 banking sector. Today we do have a rise, though. This is a red candle because there was a gap up. We're still 2% up from the lows at the closing point we saw yesterday, which was at the 200-day moving average.
So I think what's going on here is the fact that the markets appreciate what the Swiss National Bank has done, the fact they provided this backstop. But I think in the longer term picture, we need evidence to suggest that there is not going to be a systemic risk that the banking sector is facing. And I think we're far away from that point at which investors believe that we're over the worst. I think possibly there could well still be the worse to come. And people ought to be vigilant to the potential downsides, not just for banking stocks, but for the entire global market.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
