Credit Suisse Crashes the Market – Drops 25%
Fears of contagion in the banking sector were realized last night as Swiss giant Credit Suisse’s share price tanked nearly 25% in one trading session. US stock indices suffered, although not by the extend that some investors may have feared earlier in the day with the Dow closing down 0.87%, the S&P off 0.7% and the Nasdaq actually managing to finish just in the black. Euro and Swiss plunged on the news and Safe Haven Gold and Usd appreciated.
ECB Crucial Rate Decision Crucial
The timing of yesterday’s market turmoil could not have come at a worse time for the European Central Bank as it prepares to deliver it’s latest rate decision. At the start of yesterday’s session we would have been confidently talking about a rate hike but chances of that dropped dramatically during the day, from 90% chance of a 50bp hike down to 20% by the close. It would be a shock to the market if we see 25bps or even no change, but these are once again unprecedented times for both traders and indeed central banks, so be prepared for more moves in the single currency in the days ahead.
Another Day of Market Turmoil Ahead?
Looking ahead at the rest of the days trading and once again expect investors to be analyzing every fresh update on the banking sector. In terms of economic data releases we have already seen a surprise upside result for Australian employment numbers in the Asian session. Later in the day we have the usual weekly US employment claims data followed swiftly by the crucial ECB rate announcement and associated statement and press conference.
