European stocks higher; Credit Suisse soars on SNB support line

This post was originally published on this site – European stock markets traded higher Thursday, helped by strong gains from Credit Suisse after the embattled lender shored up its liquidity position ahead of the latest European Central Bank policy-setting meeting.

At 05:15 ET (09:15 GMT), the DAX index in Germany traded 0.4% higher, the CAC 40 in France climbed 0.4% and the FTSE 100 in the U.K. rose 0.5%.

Credit Suisse (SIX:CSGN) stock leaped over 20% early Thursday, dragging the whole banking sector higher, after the Swiss lender secured a CHF 50 billion ($1 = CHF 0.9297) support line from the Swiss National Bank, a move it described as “decisive action to pre-emptively strengthen its liquidity”.

The bank’s shares had plummeted to a record low on Wednesday as its main investor, Saudi National Bank, said it was unable to provide more funding to the lender, which has struggled with hefty customer outflows after a string of scandals in recent years. 

In a statement overnight, the SNB and regulator Finma had asserted that Credit Suisse met all the required standards for capital and liquidity that apply to systemically important banks.

The spotlight is now firmly on the European Central Bank, which holds its latest policy-setting meeting later in the session.

The ECB had previously signaled the likelihood of another interest rate increase of 50 basis points as underlying Eurozone inflation remained elevated, but the recent banking turmoil, with three U.S. banks collapsing, most notably Silicon Valley Bank, could prompt the policy makers to opt for a more cautious stance.

The market now sees a 25 basis point hike as the most likely outcome later Thursday, a dramatic repricing from the near certainty of a 50 bp hike at the start of the week.

ECB President Christine Lagarde is sure to be asked at the subsequent press conference how the central bank can balance efforts to deliver price stability while safeguarding financial stability.  

In corporate news, away from the banking sector, Deliveroo (LON:ROO) stock fell 3% after the food delivery service reported lower-than-expected annual revenue and warned of an uncertain trading environment in 2023.

Holcim (SIX:HOLN) stock climbed 1.2% after the Swiss building materials company said it has acquired HM Factory, a Polish concrete supplier for an undisclosed sum.

Oil prices traded higher Thursday, rebounding from 15-month lows as the financial lifeline to Credit Suisse helped boost risk sentiment, diluting concerns that a full-blown banking crisis would stymie global economic activity.

By 05:15 ET, U.S. crude futures traded 0.2% higher at $67.75 a barrel, while the Brent contract rose 0.5% to $74.03. 

Both benchmarks have slumped around 10% this week, falling to their lowest levels since December 2021.

Additionally, gold futures fell 0.4% to $1,924.50/oz, while EUR/USD traded 0.3% higher at 1.0610.