The woes of Credit Suisse slammed the brakes firmly on a rally in European shares on Friday sending markets into the red after early morning gains were driven by an industry-led bail out of San Francisco-based First Republic Bank.
The pan-European Stoxx 600 nosedived despite strong sessions in the US and Asia that saw regional stocks up almost 1% in early deals after a collective of banks injected $30bn to rescue First Republic – caught up in the collapse of Silicon Valley Bank last week.
Shares in Credit Suisse, which have whipsawed all week, were back out of favour when the inevitable US lawsuit appeared overnight. The stock was down 11% in midday trade, having rebounded on Thursday when it said it would utilise a $54bn loan from the Swiss National Bank to shore up its balance sheet.
In a thin day of corporate and economic data there was little else to drive sentiment. Oil stocks rose in line with a rise in crude prices.
“Oil is rebounding but is on track for its biggest weekly decline of 2023. Saudi Arabia’s energy minister met with Russia’s deputy prime minister Alexander Novak to discuss the volatility in the oil markets and OPEC+’s commitment to balancing the market, which helped the market,” said Interactive Investor head of investment Victoria Scholar.
“The Swiss National Bank’s intervention to provide a lifeline to Credit Suisse, which lifted financial markets also helped to buoy oil prices amid a diminished risk of financial contagion and a significant economic impact.”
In other equity news, BT Group fell when the UK telecoms regulator delayed a finding on a new broadband deal from its Openreach division by two months.
Reporting by Frank Prenesti for Sharecast.com
