The Wall in the Red – The Credit Suisse crisis reignites concerns about banks

Last update: 16.05.2020

All three major Wall Street indices posted heavy losses on Wednesday as pressure intensified on the financial sector with shares of Credit Suisse of Switzerland, which maintains a large presence in the US, dropping as much as 29%, While its negotiations between sessions were suspended.

on the industrial board Dow Jones It lost more than 500 points, or 1.75%, at 31,590, the broadest Standard & Poor’s 500 Declining 1.65% to 3850 units which is technically weighted Nasdaq down 1.25% to 11,280 points.

from 30 Involved That make up the Dow Jones index, only 3 move with small gains, while the remaining 27 are in the “red” with Goldman Sachs at the bottom, followed by American Express, Boeing, JPMorgan and Dow Inc with losses of more than 4%.

In recent days, the global crisis surrounding the financial industry has focused on regional US banks such as Silicon Valley Bank and Signature Bank, which collapsed due to mismanagement by their managements amid an environment of rapidly rising interest rates last year by the Federal Reserve.

However, on Wednesday morning the focus shifted to major European banks, as Credit Suisse shares fell to a new record high.

Credit Suisse’s largest private shareholder has ruled out bailing out the Swiss bankciting regulatory framework issues.

“The answer is an absolute refusal, for many reasons beyond the simplest, that there is the issue of the regulatory framework and articles of association as our participation will exceed 10% (including the percentage we own at the moment is 9.88%),” Chairman of the Board of Directors of the National Bank of Saudi Arabia, Ammar Al-Khudairi, said in an interview with TV. Bloomberg on Wednesday when asked if his bank would be open to helping Credit Suisse if it made a request to provide liquidity.

For his part, Credit Suisse President Axel Lehmann said that day State aid to the Bank “is not necessary.” Speaking at the Financial Industry Conference in Saudi Arabia, Lehman stressed that it was inaccurate to compare Credit Suisse’s woes with the recent collapse of Silicon Valley Bank, mainly because of the different regulations governing the two banks. “We have strong capital ratios, a strong balance sheet,” Lehman stressed, adding, “We’ve already been on medication,” noting that the bank is on the right track with its restructuring program.

Shares in Credit Suisse fell 29% on Wednesday to a new record low on the Zurich Stock Exchange of CHF1.59.

Since Credit Suisse is dragging a large part of the European banking industry with it, shares in Societe Generale, Monte dei Paschi and UniCredit have also been suspended from trading, Major US banks Citigroup and Wells Fargo see their shares lose more than 4%And Goldman Sachs fell more than 5% and Bank of America fell more than 2%.

the US regional banks, which took a break leading to the market rally on Tuesday, is under heavy pressure today. its address The First Republican Bank fell 14%. Big losses for Fifth Third Bancorp at -5.72%, Old National Bancorp at -4.5% and Zions Bancorp at -3.83%.

United States: An unexpected drop in producer prices in February

In today’s macro data, US producer prices increased by 4.6% in February on an annual basis, against expectations of a 5.4% increase, while in January they increased by 5.7% from the corresponding month in 2022.

On a monthly basis, however, prices unexpectedly fell by 0.1%, against median expectations for a 0.3% rise. In January it had increased by 0.3% compared to December.

The structural PPI (which excludes food and energy) rose 4.4% year-on-year, against expectations of 5.2%, while the previous month had been flat at 5.4%.

On a monthly basis, the structural index remained stagnant (0%) against expectations for a rise of 0.4%. In the previous month, it recorded a slight increase of 0.1% compared to December 2022.

A monthly decrease of 0.4% was also observed. retail In the United States in February, it amounted to $697.9 billion, just below analyst estimates.

However, year-over-year retail sales were up 5.4%. According to the same numbers for the quarter ending in February, it increased by 6.4% compared to last year.

Retail sales fell 0.1% month over month, but rose 4.0% year over year.

Meanwhile, food and beverage services increased by 15.3% compared to February 2022, while general merchandise stores increased by 10.5%.