The turmoil surrounding the banking sector in the USA has spread to Europe. The major Swiss bank Credit Suisse ended the trading day down more than 24 percent. The stock market value has never been lower, reports Bloomberg. After the stock exchanges closed in Europe, it became clear that Credit Suisse meets the requirements to get money loans from the Swiss central bank to avoid collapse. – If there is a need, the SNB will help Credit Suisse financially, the Swiss central bank and the Swiss Financial Supervisory Authority wrote in a joint statement on Wednesday evening. Credit Suisse says it is happy with the promise of help with liquidity. The bank crisis dragged down the stock exchanges on Wednesday. After the promise of liquidity, the stock market fall was less dramatic than earlier in the trading day. The S&P 500 was down 0.69 percent and the Dow Jones down 0.87 percent, while Nasdag had risen 0.05 percent. Heavy stock market fall in Europe Europe’s main indices had fallen more than 3 per cent at closing time on Wednesday afternoon. The British FTSE 100 index closed down 3.8 percent. It is the worst stock market fall since February 24, 2022, when the war in Ukraine started. In Paris, the CAC index fell 3.6 percent, while the DAX index in Frankfurt ended the day with a decrease of 3.3 percent. It was bank stocks in particular that dragged the stock exchanges down. The euro fell 1.8 percent against the dollar. There is a lot of fear in the market after two American banks recently collapsed, explains senior portfolio manager at Storebrand, Olav Chen. – It gives a flashback to the financial crisis, when you see bank after bank potentially going under, says Chen. Olav Chen, senior portfolio manager and head of allocation and global interest at Storebrand. Photo: ISMAIL BURAK AKKAN / news – This causes people to fear a new financial crisis, which leads to increased unemployment and so on. Espen Henriksen, associate professor at BI Business School, is also worried. – We should be anxious. There is a danger that there could be a new financial crisis, says Henriksen. Espen Henriksen, associate professor at BI Business School Photo: BI Business School But Henriksen does not believe that this is the most likely outcome. – The stock market fall would have been even greater if this was the guaranteed outcome, he says. Henriksen believes the stock exchanges would have fallen even more if the market really feared a financial crisis. – The market may be wrong, but we are still in a situation where things can happen. Until then, I think it is a little different from the financial crisis, says Chen. Fall for Oslo Børs and oil prices On Oslo Børs, the main index fell by 3.74 per cent. The stock exchange has many oil-heavy companies, which are affected by falling oil prices. Equinor is one of the companies that drags the stock market down, with a fall of more than 5 per cent. At 9 p.m., the oil price is 74.29 dollars a barrel, a fall of more than 4 percent. The Oseberg oil platform in the North Sea is operated by Equinor. Photo: Marit Hommedal / NTB The Norwegian authorities are monitoring the situation. – We are following developments closely and we are in ongoing contact with Norges Bank and the Financial Supervisory Authority. State Secretary in the Ministry of Finance, Erlend Grimstad to DN. Many problems at Credit Suisse Credit Suisse has long struggled with everything from scandals to weakened earnings, and lost NOK 85 billion in 2022. The bank announced last week that 2023 will also be a tired year, according to the Financial Times. Investors became more concerned when the bank said on Tuesday that it had also found weaknesses in how the reports on the bank’s finances are made. If the bank wants to try to fill up the coffers with money, they cannot go to the largest owner, the Saudi National Bank. They currently own 9.8 percent of the bank, and do not want to inject money that could increase the stake to over 10 percent, according to Bloomberg. Credit Suisse in Lugano in Switzerland Photo: ISMAIL BURAK AKKAN / news The market responded by selling off shares in Credit Suisse. The finance ministers of Switzerland and France are to speak together this afternoon to discuss the bank’s problems, according to AFP. A spokesman for the US Treasury Department says they are in contact with finance ministries in other countries about the situation surrounding Credit Suisse, reports Reuters. Concern for European banks DNB’s equity strategist Paul Harper says that the stock market falls and the turmoil in the financial markets are mainly due to concern for the major bank Credit Suisse. – Today there is more concern about European banks, and when confidence first begins to fail, investors may be frightened and sell before they know what is really happening, he says to news. Equity strategist Paul Harper at DNB Markets Photo: Stig Fiksdal In the Norwegian market, most companies fall quite sharply. The exception is, among other things, defensive shares such as Orkla and Telenor, which rise slightly. These are both companies that are fairly unaffected by the stock market turmoil. – Of all the sectors, banking is one of the most important for the economy. And in the banking industry, trust is important, so that not everyone tries to withdraw their money at the same time, says Harper. The price of oil also falls sharply due to the turmoil in the financial markets. – I think that it will very likely be turbulent in the future. This becomes a bit like a pendulum that when it swings a lot in one direction, it can swing a lot the other way too. It will take time before things calm down again, he says. – Fear that it will go badly Chief strategist Erik Bruce at Nordea agrees with the analysis and says that it is the fear that things will go badly with the banking sector that leads to the big results in the financial markets – There is not a great probability that it will go wrong with Credit Suisse. But there is a fear that things will go badly with the banking sector. What primarily falls are bank shares. The unrest is about what the sharp rise in interest rates we have behind us means for the banks, says Bruce. Chief strategist Erik Bruce at Nordea Photo: Moment Studio Bad news about finance hits hard. – The unrest is mainly due to the banks that collapsed in the US, and the unrest for the banking system. Credit Suisse is a bank that is much safer than the American ones and is subject to European regulations and has good capital coverage, says Bruce. The price rise creates headaches Senior economist Dane Cekov at Nordea says it is not unnatural that the market can fluctuate a lot during stock market turmoil. In addition to the bank crisis, the figures for inflation in the US and France in February have also arrived. The market is watching the numbers closely to find out how much central banks need to raise interest rates to cool inflation. In the USA, prices rose by 5.5 per cent excluding food and energy prices. This figure shows core inflation, which the central bank is trying to bring down to 2 percent by raising interest rates. In France, core inflation rose to 6.1 percent in February. The numbers were slightly stronger than expected, according to Cekov. – This points in the direction of the central banks continuing to raise interest rates. That may have contributed to the return of the stock market turmoil. There is still great uncertainty. There is a lot that investors and market participants have to digest, and they do not always react rationally and correctly, he says. The banking crisis puts central banks in a dilemma. They have planned to raise interest rates to cool the economy, but the market believes that interest rates cannot be raised as much if more banks get into trouble. – We don’t know how this will end. We believe that this will probably go well, but there is more uncertainty than before, and it is not a given that the central bank will raise interest rates as high as was thought a couple of months ago.
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Major Swiss bank plunges – Oslo Børs fell 3.7 percent – news Norway – Overview of news from various parts of the country
