Credit Suisse announced it will borrow up to $53.7 billion from the Swiss central bank. (File)
London:
European stock markets rose slightly on Thursday after troubled banking giant Credit Suisse secured a major financial lifeline and a key interest rate decision by the European Central Bank.
Frankfurt, London and Paris posted modest gains a day after the collapse of the two US lenders plunged around 3.5 percent on fears about the health of Credit Suisse and the broader banking system.
The euro rose against the dollar ahead of the ECB’s rate decision on Thursday.
Oil prices fell slightly on Wednesday after hitting a 15-month low.
“One minute the market is worried about a banking crisis, the next minute it’s much more relaxed,” said Russ Mould, chief investment officer at stockbroker AJ Bell.
“The next test for markets will be the ECB’s interest rate decision… Given the jitters around the banking system, an aggressive 50 basis point hike seems unlikely.”
The ECB’s call is the first by a major central bank as markets grapple with fears of a banking crisis, criticizing the eurozone institution’s decision to implement another big rate hike.
Investors say the ECB should review its plans after the collapse of Silicon Valley Bank (SVB) and Signature, the sector’s biggest failures since the 2008 global financial crisis.
Whether the US central bank will continue its rate-tightening campaign is also the subject of much debate, as SVB’s collapse has been widely linked to a sharp rise in borrowing costs over the past year.
Some commentators expect officials to raise rates again next week, but may hold off until later, and there is a belief that he may even announce cuts before the end of the year.
The market collapse forced Credit Suisse to use the Swiss central bank’s financial rescue line.
After seeing its shares tumble on Wednesday, Switzerland’s second-biggest bank struggled to avoid the latest crisis by announcing it would borrow up to $53.7 billion from the country’s central bank, battling several scandals.
Its shares rose more than 30 percent in the open Thursday.
“Concerns about a repeat of past crises and the implications for the financial system and the global economy have again spooked markets,” said Craig Erlam, senior analyst at OANDA trading group.
“Of course, that’s only natural when so little is known about the condition and what it means for the health of the rest of the system.”
(Except for the headline, this story was not edited by NDTV staff and was published on a syndicated channel.)
