Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Tuesday, Jun 18, 2024

Markets still uncertain after SVB and Credit Suisse shocks

Markets still uncertain after SVB and Credit Suisse shocks

Concerns abound as the FTSE is on course to be down in the week overall and questions swirl around strategically important banks rescuing First Republic Bank.
A tumultuous week in the markets ended on an uncertain note - suggesting fears remain after large losses from the collapse of Silicon Valley Bank.

The FTSE 100 (Financial Times Stock Exchange) index of the most valued companies on the London Stock Exchange started the day at around the 7,500 mark - better than all of Thursday and most of Wednesday and a 1% increase - but the early morning gains had worn off by the close.

The most widely followed index of European stocks, the STOXX 600, had similar results and started the day up 0.8%, also better than Thursday and most of Wednesday, but lost all gains by end of day.

It followed the close on Thursday night of Asian markets, including Tokyo's Nikkei and China's Shanghai Composite, in positive territory.

The activity came after a group of 11 major banks provided $30bn (£24.7bn) of cash in an effort to end the crisis of confidence around First Republic, a regional US lender.

The bank has seen its share price collapse about 75% amid sector-wide balance sheet scrutiny following the collapse of Silicon Valley Bank (SVB) last Friday.

That collapse brought about a turbulent start to the week as the FTSE 100 was dragged down 2.2%, more than last Friday's 1.7% fall from when SVB news came through.

But the move did not reassure markets, as on Friday afternoon there was a more than 20% fall in share value.

Credit Suisse concerns

On top of the Silicon Valley Bank collapse, the troubles of Credit Suisse also led to investor jitters this week.

Credit Suisse, Switzerland's second-largest bank, has now been hit by a US investors lawsuit, over accusations the bank concealed its troubles.

It announced on Wednesday it had found "material weaknesses" in its financial reporting processes for 2021 and 2022.

Its shareholder, Saudi National Bank, said it would not provide any further financial assistance causing the value of the bank to fall by 30%.

The Swiss central bank stepped in to provide funding of 50bn Swiss francs (£44.5bn), which was welcomed by Chancellor Jeremy Hunt.

Now the bank is being sued by US investors who claim the lender made "materially false and misleading statements" in its 2021 annual report.

'We are not out of the woods'

Analysts have cautioned the difficulties are not over.

"We are not out of the woods," the chief market analyst at financial services company Finalto said.

The FTSE 100 is on course to be 3% down in the week overall and there is concern over the involvement of large banks in supporting First Republic Bank (FRB).

"Spreading the risk of financial contagion to achieve a false sense of confidence in FRB is bad policy," billionaire investor Bill Ackman said.

"The [strategically important banks] would never have made this low return investment in deposits unless they were pressured to do so and without assurances that FRB deposits would be backstopped if it failed.

"The market has responded to this fictional vote of confidence with a 35% after-market decline in FRB stock."
Newsletter

Related Articles

Hong Kong News
0:00
0:00
Close
It's always the people with the dirty hands pointing their fingers
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
×