The banking sector, already shaken by the bankruptcy of SVB Bank, was hit hard today by Credit Suisse’s record decline.
Credit Suisse, Switzerland’s second-largest bank, has been experiencing difficulties for some time. Its major shareholder, Saudi National Bank, announced that it would not provide financial support.
In a statement to an international television channel today, Saudi National Bank President Ammar Al Khudairy stated that they would not provide financial support to Credit Suisse, which they are a major shareholder of, due to legal conditions and many other reasons. Following this announcement, the daily loss of the bank’s shares, which experienced a sharp decline, rose to 30%, with the share value falling below 1.70 francs to reach historic lows.
The fear that banking problems seen in Europe, as well as in the US, could turn into a crisis caused sharp selling in the markets today. While European indices lost over 3%, US markets also started the day with a loss of nearly 2%.
Expectations for interest rates disrupted
Markets are expecting the Fed and ECB to pause their interest rate hikes at their meetings this month due to the ongoing banking problems.
Risk appetite decreases
As the fear of crisis increased, the outflow from risky assets increased today, while demand for safe-haven assets also rose.
Due to the sharp decline in European bonds, the euro/dollar fell nearly 2% today to 1.0525. The euro, which lost value against major currencies such as the pound, franc, and yen, also experienced a decline of nearly 2% against the Turkish lira and tested below the 20 level.
The dollar index rose 1% today to 104.95. The dollar, which rose nearly 1% against most developed country currencies, is only declining against the yen. The Swiss franc, which is a safe-haven asset like the yen, is also losing value against the dollar today due to the impact of the collapse of Credit Suisse shares.
