Wall Street down sharply due to turmoil in the banking sector, thanks to Credit Suisse

- Advertisement -spot_imgspot_img
Wall Street down sharply due to turmoil in the banking sector, thanks to Credit Suisse

The stock markets in New York fell sharply today, after the European markets previously recorded significant price losses. Yesterday the stock markets seemed to be recovering from the turmoil that followed the bankruptcy of the American banks Silicon Valley Bank and Signature Bank, but the fall in the price of the Swiss bank Credit Suisse pulled sentiment down again.

The stock markets in New York fell sharply today, after the European markets previously recorded significant price losses. Yesterday the stock markets seemed to be recovering from the turmoil that followed the bankruptcy of the American banks Silicon Valley Bank and Signature Bank, but the fall in the price of the Swiss bank Credit Suisse pulled sentiment down again. (ANP / Eyevine)

From evil…

Credit Suisse plummeted about 22 percent to a new low. The Zurich-based bank has had bad press for some time due to scandals, a money laundering investigation, customers continuing to withdraw their money from accounts and concerns about the future of the bank. The group previously lost billions because it did business with investment fund Archegos and financing company Greensill, both of which fell due to risky behaviour.

Yesterday Credit Suisse published the annual figures for 2022 and again that was not an exciting event. Not in the least because of accounting problems that have been identified. According to accountant PwC, there are ‘errors in the internal control systems’.

…to worse

It couldn’t get any worse, until today Saudi National Bank, Credit Suisse’s largest shareholder, announced that it would not provide any further support. This not only made a deep dent in the share price of the Wall Street-listed bank, but also caused great unrest and heavy price losses in the European banking sector. The major US banks JPMorgan Chase, Bank of America, Citigroup and Wells Fargo were also dragged down in sentiment, losing to 4.9 percent. The Wall Street Journal reports that the European Central Bank has made an inventory of how much risk banks run with the failing bank. A bad sign for the Swiss bank.

While the smaller American banks saw a strong recovery yesterday, that had now also ended: Zions Bancorp, PacWest Bancorp and Comerica fell to 12.1 percent, while First Republic Bank even lost 15.1 percent. Shortly after the start of trading, the Dow Jones index was 1.4 percent lower at 31,689 points. The broad S&P 500 fell 1.3 percent to 3,868 points and tech exchange Nasdaq fell 1 percent to 11,311 points.

Waiting for the Fed

Investors seem to be mainly waiting for more clarity about the impact of all the banking turmoil on the interest rate policy of the central banks. For example, it is hoped that the US central bank will raise interest rates less sharply next week in order to preserve stability in the financial sector. Investment bank Goldman Sachs even expects the Fed to refrain from further hikes altogether. The Fed would thereby send a signal that the problems in the banking sector pose a greater threat to the economy than the high inflation.


- Advertisement -spot_imgspot_img
Latest news
- Advertisement -spot_img
Related news
- Advertisement -spot_img