Europe, US futures rise on Credit Suisse funding: Markets wrap

European and US equity futures advanced, Asian stocks pared losses and Treasuries were flat Thursday after Credit Suisse Group AG said it would borrow money from Switzerland’s central bank and seek to repurchase debt.

Contracts for the Euro Stoxx 50 index climbed 2% as the news from Credit Suisse provided a measure of calm for jittery investors. It has arranged to borrow as much as 50 billion francs ($54 billion) from a Swiss National Bank liquidity facility and will offer to buy back up to three billion francs of dollar- and euro-denominated debt.

The Swiss franc rallied on the news in volatile trade after a sharp selloff Wednesday. The euro strengthened slightly ahead of an expected rate increase from the European Central Bank later Thursday, with more investors now positioning for a 25 basis point move after earlier expectations for double that.

Treasury yields were flat following steep falls in the previous session. Australian and New Zealand yields fell, as did those for Japan’s benchmark 10-year debt. The yen traded at the highest level relative to the greenback in a month. An index of the dollar fell.

Asian shares recouped some losses from earlier in the session while a gauge for the region remained down by 1%. Equity benchmarks in Japan, Australia and Hong Kong also fell about 1%, with financial companies among the hardest hit in the three markets. India’s NSE Nifty 50 Index headed for a technical correction after declining 10% from a peak in December on Thursday.

Contracts for the S&P 500 rose about 0.4% after the index fell 0.7% Wednesday. Tech stocks offered a bright spot as traders began to forecast interest rates climbing less than previously anticipated. Nasdaq 100 futures advanced Thursday after the benchmark posted its third day of gains on Wednesday as Netflix, Meta Platforms, Microsoft Corp, and Amazon.com rallied.

Selling in bank stocks dragged the KBW Bank Index, one of the broadest measures of the US banking system, down more than 3% Wednesday. First Republic Bank shares fell more than a fifth after being cut to junk by two credit firms, dragging its decline over the past week to more than 70%.

Traders were almost evenly split on whether the Federal Reserve will increase interest rates when it meets next week. Market pricing now suggests the Fed will soon pivot and will cut rates by as much as 1% by the end of the year.

“This episode is not the same as 2008. It is not a credit crisis, but an asset crisis,” said Nicholas Ferres, chief investment officer of Vantage Point Asset Management. “The challenge now that has been uncovered is the mark-to-market fantasy of venture capital, private equity and commercial real estate assets.”

Elsewhere in markets, oil rose from the lowest close in 15 months after a three-day rout started by the US banking crisis and accelerated by options covering.

Copper and aluminum also advanced. Gold traded near a six-week high, on signs that problems in the banking sector may cause the Fed to pause rates hikes.

Key events this week:

• Eurozone rate decision, Thursday
• US housing starts, initial jobless claims, Thursday
• Janet Yellen appears before the Senate Finance Committee, Thursday
• US University of Michigan consumer sentiment, industrial production, Conference Board leading index, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.4% as of 1:20 p.m. Tokyo time. The S&P 500 fell 0.7%
• Nasdaq 100 futures rose 0.4%. The Nasdaq 100 rose 0.4%
• Japan’s Topix fell 1.4%
• Australia’s S&P/ASX 200 fell 1.6%
• Hong Kong’s Hang Seng fell 1.5%
• The Shanghai Composite fell 0.5%
• Euro Stoxx 50 futures rose 2.1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro rose 0.2% to $1.0600
• The Japanese yen rose 0.6% to 132.62 per dollar
• The offshore yuan fell 0.1% to 6.9009 per dollar

Cryptocurrencies

• Bitcoin fell 0.1% to $24,357.16
• Ether fell 0.3% to $1,648.3

Bonds

• The yield on 10-year Treasuries advanced three basis points to 3.48%
• Japan’s 10-year yield declined two basis points to 0.31%
• Australia’s 10-year yield declined nine basis points to 3.35%

Commodities

• West Texas Intermediate crude rose 0.7% to $68.05 a barrel
• Spot gold fell 0.3% to $1 913.68 an ounce