After the weak previous week, there are no signs of stabilization in the Dax on Monday. The banking sector in particular continues to cause massive uncertainty. As part of an "emergency rescue" tightened over the weekend, UBS takes over the badly battered Credit Suisse. This is what the UBS Chairman of the Board of Directors called the step. Meanwhile, six major central banks are increasing their pace to supply the financial system with dollar liquidity.
In this uncertainty, the broker IG estimates the Dax about two and a half hours before the start of trading 0.2 percent lower to 14,740 points. Already in the previous week, the German leading index had fallen by more than 4 percent, back to the level of mid-January and to the 100-day line. The index of the European banking industry, the Stoxx Europe 600 Banks, lost as much as 11.5 percent. At the beginning of the month, he had climbed to the highest level since 2018 in the interest rate turnaround, before the crisis of the US regional banks and concerns about Credit Suisse threw him back by a total of almost 18 percent.
In Asian equity trading, bank stocks sold off on Monday amid the turmoil. Particularly under pressure are the shares of HSBC Holdings Plc, which fell by up to 6.6% and thus the strongest in almost six months. "The Credit Suisse deal has resulted in significant losses for some bondholders, and investors in the region are likely to reassess their exposure to financial market turbulence and risk," said Marvin Chen, an analyst at Bloomberg Intelligence.
In the recent banking crisis, the key interest rate decision of the US Federal Reserve on Wednesday is awaited with particular excitement. Your colleagues from the ECB had not been deterred in the interest rate turnaround and once again clearly turned the interest screw. In the case of the Fed, there have recently been more and more voices expecting a pause in the fight against inflation in an uncertain environment.
Central banks want to improve dollar supply
In a "coordinated action," the European Central Bank (ECB), the US Federal Reserve and other major central banks announced that they would facilitate banking transactions in dollars, thereby calming financial markets. As the participating central banks announced on Sunday evening, so-called swap transactions are to be expanded from Monday, with which the central banks exchange foreign currencies with each other. The aim is to improve the supply of dollars to central banks outside the US.
In addition to the ECB and the Fed, the Swiss National Bank and the central banks of Great Britain, Canada and Japan are involved. They reportedly agreed to increase the frequency of currency swaps in dollars with a seven-day maturity from weekly to daily.
"Reducing tensions in global financing markets"
Swaps are an important "liquidity hedge to ease tensions in global financing markets and thus help mitigate the impact of such tensions on the supply of credit to households and businesses," the statement said.
Shortly before, the major Swiss bank UBS had announced that it would take over the stumbling competitor for three billion francs. UBS and Credit Suisse are among the 30 banks worldwide classified as "too big to fail" because their insolvency would have a devastating impact on the global economy as a whole.
Credit Suisse had recently come under further pressure after a series of previous scandals – including the closure of the two US banks Silicon Valley Bank and Signature Bank, which had worried the financial sector. Statements by Credit Suisse's largest shareholder, Saudi National Bank of Saudi Arabia, that it did not want to increase investment in Switzerland's second-largest bank, then sent the share price plummeting.