(CercleFinance.com) – After its bout of panic the day before (-3.6%), the Paris Stock Exchange should recover sharply on Thursday morning following the announcement by the Swiss authorities of measures to support Credit Suisse.
Around 8:15 a.m., the ‘future’ contract on the CAC 40 index – delivery at the end of March – climbed 100.5 points to 6,988 points, announcing a vigorous rebound in the first trade.
In a press release published yesterday evening, the Swiss Financial Market Supervisory Authority (FINMA) wanted to be reassuring about the Credit Suisse file, which caused a dark session for the markets on Wednesday.
FINMA believes that the Swiss bank fully meets the capital and liquidity requirements applicable to banks deemed to be systemically important.
The Swiss National Bank (SNB) assured, for its part, that it was ready to provide the establishment with sufficient liquidity if necessary.
Credit Suisse immediately took him at his word by in turn indicating its intention to borrow from the Swiss central bank up to 50 billion Swiss francs (about 50 billion euros).
Referring to ‘decisive’ actions in a ‘preventive’ logic, the group also expressed its desire to buy back nearly three billion Swiss francs of debt instruments in circulation on the markets.
All these announcements come as the private bank’s stock price fell more than 24% yesterday amid concerns about its capitalization.
Frightened by the fall of Credit Suisse, the European markets all tumbled yesterday. In Zurich, the SMI index dropped 1.9% while in Frankfurt, the DAX fell 3.3%. The pan-European Euro STOXX 50 index lost 3.5%.
It is in this climate of confusion that the European Central Bank (ECB) is today meeting its Board of Governors, eagerly awaited by investors.
The recent turmoil in the markets should not dissuade the central bank from another rate hike of 50 basis points after its meeting.
Beyond this decision, it is above all the speech of Christine Lagarde, its president, who will arouse interest in order to try to guess the future trajectory of rates.
“Ms. Lagarde will have to comply with the mandate and renew her commitment to fight inflation without adding to the ambient volatility,” warns Axel Botte, international strategist at Ostrum AM.
For strategists, reassuring words about the health of European banks and implicit support for the banking system of the Old Continent would be welcome in order to soften the pill of rate hikes.
In general, investors are hoping central banks will be more dovish as they wait to assess the fallout from the current crisis, which many attribute to tighter credit conditions.
“However, a major difference between the current situation and previous episodes of banking crisis is a more solid macroeconomic backdrop, with in particular persistent inflationary pressures,” recalls Frederik Ducrozet, head of economic research at Pictet Wealth Management.
“This will make it difficult to trade-off between inflation and financial stability risks as central banks try to postpone rate cuts for as long as possible,” he warns.
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