LDN - Business

Futures mixed after Swiss central bank lifeline for Credit Suisse

[March 16, 2023] By Shubham Batra and Amruta Khandekar

(Reuters) -U.S. stock index futures were mixed on Thursday as the Swiss central bank's lifeline for embattled Credit Suisse did little to boost investor sentiment as they awaited economic data for clues on the outlook for U.S. interest rates.

U.S.-listed shares of Credit Suisse rose 8.8% in premarket trading after the bank secured a credit line of up to $54 billion from the Swiss National Bank to shore up liquidity and investor confidence, which had nosedived after the lender's shares slumped on Wednesday.

Troubles at Credit Suisse, coming on the heels of the collapse of SVB Financial and peer Signature Bank have sparked fresh worries about stress in the banking sector, dwarfing relief on expectations of less aggressive moves by the Federal Reserve.

Weak retail sales figures as well as data showing a downward trend in producer inflation on Wednesday had bolstered bets of a small rate hike by the Federal Reserve at its meet concluding on March 22.

A meeting of European Central Bank policymakers is underway, with markets hoping that the turmoil in financial markets could force it to ditch plans for another hefty interest rate hike.

"Central banks are in a bit of a bind because they need to make sure that inflation is brought back under control. But now they're facing another problem, which is a crisis of confidence in the banking system," said Andrea Cicione, head of research at TS Lombard.

"People are rightly concerned about banks. We are going through the situation which is very different from what we had in 2008, where we have to deal with interest rate risk."

After initial gains, shares of regional lenders First Republic Bank, Western Alliance Bancorp, PacWest Bancorp reversed course to fall 36.7%, 7.2% and 19.7% respectively.

U.S. big banks such as JPMorgan Chase & Co, Citigroup and Bank of America Corp also cut early gains and were last down between 0.1% and 0.7%.

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A specialist trader works inside a post on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 14, 2023. REUTERS/Brendan McDermid

U.S. Treasury yields rose after steep declines on Wednesday, with money markets now pricing in a 69% chance of a 25-basis-point rate hike by the Fed in March. Bets were equally split between a pause and a quarter percentage point rate hike earlier..

A slew of economic data, including February housing start numbers and weekly jobless claims, will be released at 8:30 a.m. ET, which may help investors in gauging the strength of the American economy.

The Federal Reserve Bank of Philadelphia will also issue Manufacturing Business Outlook Survey for March.

At 6:56 a.m. ET, Dow e-minis were down 93 points, or 0.29%, S&P 500 e-minis were down 7.5 points, or 0.19%, and Nasdaq 100 e-minis were up 19.5 points, or 0.16%.

Shares of Adobe Inc supported Nasdaq futures, rising 5.8% in premarket trade after the Photoshop maker raised its 2023 profit target.

Facebook parent Meta Platforms and Snapchat operator Snap Inc rose 1.9% and 6.6% respectively after the Joe Biden administration threatened to impose a ban on TikTok.

Virgin Orbit plunged 44.5% after the satellite launch company said it would pause all operations from March 16, and was conducting discussions with potential funding sources.

(Reporting by Shubham Batra and Amruta Khandekar in Bengaluru; additional reporting by Shristi Achar A; editing by Uttaresh Venkateshwaran and Vinay Dwivedi)

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