Banking fears grip global markets as Credit Suisse shares plummet
US banks also affected as investors remain wary of banking fallout
New York: - Global markets were hit with banking fears as the US' Dow fell more than 600 points on Wednesday, according to reports. The S&P and Nasdaq also slipped by approximately 2 per cent and 1.5 per cent respectively, CNN reported.
Shares of Credit Suisse, a Swiss lender, were down more than 20 per cent after its biggest shareholder declined to increase funding. On Tuesday, the bank cited "material weakness" in its financial reporting and eliminated executive bonuses, CNN reported. This news affected US banks as well, with Wells Fargo down 4.9 per cent and JPMorgan Chase down 3.6 per cent.
Last week and earlier this week, the collapse of Silicon Valley Bank and Signature Bank rocked markets, and Wall Street continues to grapple with the banking tumult domestically. Investors remain wary of the banking fallout and what it means for the Federal Reserve's interest rate-hiking campaign going forward, as well as the overall stability of the financial sector.
As if the panic over the US banking system wasn't enough, a fresh burst of anxiety blew in from Europe. Credit Suisse shares crashed more than 20 per cent in Zurich, dragging down European bank stocks with them, and US stock futures fell on Wednesday morning after rallying strongly on Tuesday, according to CNN.
"Credit Suisse has been a slowing-moving car crash for years," wrote Peter Boockvar, chief investment officer of Bleakley Financial Group. "But now today's news, of course, is happening in the vortex of SVB." The collapse of Silicon Valley Bank and Signature rattled investors worldwide, making the banking sector particularly vulnerable to any signs of trouble.
Shares of several top European banks, including BNP Paribas, Societe Generale, Commerzbank, and Deutsche Bank, were halted on Wednesday as the fallout from Credit Suisse's crisis of confidence spilled out throughout the sector. This triggered automatic circuit breakers designed to give investors a breather and prevent stocks from rapidly collapsing, CNN reported.