US stock index futures advance amid Credit Suisse crisis
Following a swing in the previous session, US stock index futures advanced as investors tried to pull Credit Suisse out of the crisis while awaiting a new decision on the Federal Reserve Bank’s monetary policy.
Investors are now monitoring the potential for a 25-basis-point increase to interest rates after the Federal Reserve meeting – a sudden reversal from the predicted 50-basis-point increase that was forecast prior to the financial disruption caused by Silicon Valley’s failure.
The rescue of Credit Suisse by UBS and the interventions by central banks to strengthen liquidity lessened the possibility of contagion in the wider banking industry, thereby boosting the values of the primary Wall Street index.
Shares of regional lenders advanced in premarket trading, with First Republic Bank up 23.7% after hitting a record low on Monday.
Western Alliance Bancorp and PacWest Bancorp rose 6.8% and 4.7%, respectively, compared to their peers.
Major US banks such as JPMorgan Chase & Co, Citigroup, and Bank of America advanced between 0.7% and 1.4%.
The Fed faces a relatively difficult task at this week’s FOMC meeting.
US Treasury yields advanced for a second day in a row as the threat of a banking crisis passed, with the yield on the two-year note, a clear indicator of interest rate expectations, last standing at 4.05%.
February home sales statistics will be released later in the day, indicating the economy’s strength.
European markets advanced
The pan-European Stoxx 600 index advanced by 1.35%. Banks gained 3.2% as the financial services sector advanced by 2.4%.
European markets were volatile, with the pan-European Stoxx 600 index down in early trading.
UBS, on Sunday, entered into an emergency rescue deal by which they purchased rival Credit Suisse for 3 billion Swiss francs. According to UBS statistics, the combined bank will have $5 trillion in invested assets. Shares of Credit Suisse fell 53.3% at one point on Monday, while UBS rebounded from losses to 3.9%.
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