The banking crisis of confidence that started with the collapse of SVB Financial had already severely hampered the performance of financial stocks, and the setbacks of Credit Suisse only added fuel to the fire. Switzerland’s second biggest bank sank by 24% after its main Saudi shareholder said that it would not injecting more money into it. The Swiss National Bank was forced to intervene, granting a loan of 50 billion francs. The objective is to send a strong message to the markets. As for Credit Suisse, it is an unfortunate and extreme illustration of the lack of control that has plagued the institution for years.

European indices tumbled, led by financial stocks but also by oil majors, as crude oil prices fell because of fears of an economic slowdown. This was illustrated by the French CAC40, which finished at -3.6%, and the British FTSE 100, at -3.8%. The Swiss SMI was hit by Credit Suisse’s 24% drop and UBS’ 9% decline, but it was able to count on Nestlé and Novartis to limit its losses to 1.9%.

In this explosive context, Wall Street held up surprisingly well, with the Nasdaq 100 up 0.4%. However, let there be no mistake, the situation has become considerably tenser in recent days. But if some compartments are surviving, it is mainly because the market is once again counting on central banks to put out the fire. In this case, investors believe that this banking crisis will force the Fed to stop or even reverse its monetary tightening cycle in the short term, with just one week to go before the next monetary policy decision. The European Central Bank released its decision today and chose to raise its rate by 50 bps. However, it abandoned its commitment to increase them "significantly" in the coming months.

Forecasts are still in favor of a 25-basis point rate hike by the Fed next week. But things change very quickly and the realities of one day are not necessarily those of the next.

The data remains mixed and the latest job numbers today added a bit of confusion. New claims for unemployment benefits fell more than expected last week, highlighting the continued strength of the US labor market. They fell by 20,000 to a seasonally adjusted 192,000 for the week ended March 11, while 205,000 were expected by analysts.

This morning, Wall Street’s main indexes were mostly down, with the S&P 500 losing 0.5%, the Dow Jones falling 0.9% and the Nasdaq 100 remaining flat.

 

Economic highlights of the day:

Building permits and weekly unemployment in the US and the ECB's rate decision are today’s main indicators. All the agenda is here. 

The dollar is flat against the euro and the pound at EUR 0.9440 and GBP 0.8284. The ounce of gold is worth USD 1924. Oil is still suffering, with North Sea Brent crude at USD 72.86 a barrel and US WTI light crude at USD 66.82. The yield on 10-year US debt drops to 3.57%. Bitcoin jumps to around 24,800 dollars.

 

In corporate news:

* Wall Street-listed Credit Suisse shares were up 8.8 percent in premarket trading after the bank decided to borrow up to 50 billion Swiss francs from the Swiss central bank. JPMorgan, Citigroup, Wells Fargo and Bank of America were up 0.9% to 1.3%.

* Snap, Meta Platforms - The Biden administration has demanded that TikTok's Chinese owners sell their stakes in the social network or it will be banned in the United States, TikTok told Reuters. In pre-market trading, Snap and Meta Platforms were up 5.6 percent and 1.7 percent respectively.

* Berkshire Hathaway has again increased its stake in Occidental Petroleum and now owns about 23.1% of the company. The oil group was up slightly more than 1% in premarket trading.

* Adobe was up 6% in premarket trading after raising its earnings per share guidance for fiscal 2023.

* First Republic Bank is considering various strategic options, including a sale, Bloomberg reported, citing people close to the matter.

* Robinhood Markets announced the retirement of its chief operating officer Gretchen Howard at the end of the year.

 

Analyst recommendations:

  • Centamin: Liberum resumes coverage to buy targeting GBp 119.
  • Centene: Baptista Research initiated coverage with a recommendation of buy. PT set to $88.40.
  • Choice Hotels: Baird upgrades to outperform from neutral. PT up 19% to $134.
  • FedEx: Stifel upgrades to buy from hold. PT up 14% to $222.
  • Foot Locker: Telsey Advisory Group upgrades to outperform from market perform. PT up 22% to $50.
  • Jones Lang: Wolfe Research upgrades to outperform from peerperform. PT up 49% to $218.
  • Motorola Solutions: J.P. Morgan upgrades to overweight from neutral. PT up 18% to $305.
  • Rightmove: Panmure Gordon starts tracking to hold, targeting GBp 523.