European Stock Futures Rally; Credit Suisse Bolsters Position
On Thursday, European stock markets are anticipated to open higher following Credit Suisse’s announcement that it will shore up its liquidity position ahead of a European Central Bank (ECB) policy-setting meeting. At 03:00 ET (07:00 GMT), the DAX futures contract in Germany traded 1.4% higher, CAC 40 futures in France climbed 0.4%, while the FTSE 100 futures contract in the U.K. rose 1%.
Credit Suisse plans to borrow as much as CHF 50 billion from the Swiss National Bank in a decisive move to strengthen its liquidity. The bank’s shares hit a record low on Wednesday after Saudi National Bank, its main investor, said it was unable to provide additional funding. The bank has struggled with hefty customer outflows after a string of scandals in recent years. The recent collapse of three U.S. regional banks, including Silicon Valley Bank, has added to the difficulties in the global banking sector.
The banking turmoil moving closer to home has put the spotlight on the European Central Bank’s meeting later in the session. Although the ECB had signaled the likelihood of another interest rate increase of 50 basis points, the recent banking crisis could prompt policymakers to opt for a more cautious stance. The market now expects a 25 basis point hike as the most likely outcome later on Thursday, which is a dramatic repricing from the near certainty of a 50 bp hike at the beginning 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.
Aside from the banking sector, investors may also be watching Holcim after the Swiss building materials company announced earlier on Thursday that it has acquired HM Factory, a Polish concrete supplier, for an undisclosed sum. Quarterly earnings are expected from Italian energy giant Enel and food delivery company Deliveroo.
Oil prices rebounded from 15-month lows on Thursday as the financial lifeline to Credit Suisse helped boost risk sentiment, diluting concerns that a full-blown banking crisis would stymie global economic activity. U.S. crude futures traded 0.6% higher at $68.02 a barrel by 03:00 ET, while the Brent contract rose 0.7% to $74.22. Both benchmarks have slumped around 10% this week, falling to their lowest levels since December 2021. Additionally, gold futures fell 0.6% to $1,919.10/oz, while EUR/USD traded 0.3% higher at 1.0601.