Stock futures nudge higher on Credit Suisse buyout

On Monday, the global financial market prepares for a volatile day due to the co-ordinated support of central banks and Credit Suisse’s rescue deal resulting in mixed emotions among investors. The day started with the S&P 500 futures rising by 0.2%. During the early hours of the currency trade, the US dollar fell slightly against the euro, while the yen remained steady.

The collapse of Silicon Valley Bank in just over a week has shaken confidence in the banking system globally. To ease the situation, UBS announced its decision to acquire Credit Suisse for 3 billion francs ($3.2 billion) and take over up to $5.4 billion in losses, which Swiss authorities engineered due to the deep troubles ravaging the financial system.

The US Federal Reserve, the European Central Bank, and Bank of Japan also promised to increase support for liquidity by elevating seven-day dollar-swap operations from weekly to daily.

Rodrigo Catril, a senior currency strategist at the National Australia Bank in Sydney, said, “There are certainly a lot of concerns about Credit Suisse contagion risk,” while commenting on current issues such as the new support measures and mergers.

As trading begins, US 10-year Treasury bond June futures fell by 19 ticks. US interest rate futures were flat as investors strive to interpret what moves to contain bank wobbles indicate for global interest rates. Based on the pricing, there is a 60% chance of rate hikes by the Fed during its meeting later in the week. However, several rate cuts have been priced by the end of the year.

The stock market has not yet opened in Asia. The Swiss franc, which suffered due to concerns over Credit Suisse’s issues last week, rose 0.4% to 0.9264 against the dollar. The yen maintained stability, trading at 131.87 per dollar. On the other hand, the euro gained 0.1% to $1.1067.

(Reporting by Tom Westbrook; Editing by Sam Holmes)

A Week In Review: One America’s Rachel Acenas covers major events from the US and around the world.

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