U.S. stock futures were low amid the banking crisis
Investors assessed the resilience of the global banking system as U.S. stock futures remained low following the Swiss government’s compelled acquisition of Credit Suisse by UBS. This move is a significant measure governments take to prevent an imminent crisis in the banking industry.
- Dow Jones Industrial Average futures decreased 8 points or 0.03%
- S&P 500 futures retreated 0.05%
- Nasdaq-100 futures fell 0.05%
After the collapse of Silicon Valley Bank earlier this month, regional banks were again under heavy pressure to improve their deposit bases.
The crisis in the financial sector over the past two weeks has increased bets on the interest rate of the Federal Reserve. According to data from the CME Group, which uses Fed futures contracts, there is a 56.7% chance of the Fed raising the rate by a quarter point in the morning. The remaining 37.6% are in the bearish camp, expecting that Chairman Jerome Powell may begin to ease his aggressive moves that began in the spring of 2022.
UBS has agreed to buy Credit Suisse for 3 billion Swiss francs, combining the bank with $5 trillion in assets. Shares of Credit Suisse were down 20.3% last week. After UBS declared that it would be taking control, the Fed connected with numerous other central banks to create a shared liquidity plan. The Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank have all agreed to increase the amount of U.S. dollar swaps available daily.
First Republic shares plummet 16.3% in pre-market trading
First Republic stock fell 16.3% in the premarket on Monday. The downtrend also began after a group of banks agreed on Thursday to temporarily pause $30 billion in deposits at the San Francisco facility for at least 120 days. Last week, the SPDR Regional Banking ETF retreated 13.4%.
Despite fears surrounding banking stocks, Nasdaq Composite closed higher for the week as investors initially returned to technology stocks that can take advantage of low-interest rate offers. Meanwhile, the Dow retreated 0.16% for the week.