MARKET WRAPS
Today's Top Headlines/Must Reads:
- UBS Agrees to Buy Credit Suisse for More Than $3 Billion
- Credit Suisse Bond-Wipeout Threatens $250 Billion Market
- Here's why UBS's deal to buy Credit Suisse matters to U.S. investors
- First Republic Bank Looms Large for U.S. Regulators After Credit Suisse Sale
- Fed, Global Banks Coordinate to Ease Dollar-Funding
- Vladimir Putin Harshly Criticizes West as Xi Jinping Strikes Softer Tone
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Opening Call:
Stock futures fell heavily on Monday, with investors piling into haven assets, after regulators engineered a deal for UBS to take over rival Credit Suisse, marking the latest development in the banking turmoil set off by SVB's sudden collapse.
UBS agreed to take over Credit Suisse for more than $3 billion, the biggest banking deal in years, with regulators eager to halt a dangerous decline in confidence in the global banking system.
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However, officials' main concern remained First Republic, which fell more than 20% in premarket trading after S&P cut the regional bank's credit rating again and warned the big banks' $30 billion rescue package may not be enough.
Some investors are hoping the turmoil in the banking sector could prompt the Federal Reserve to pause its interest-rate increases this week.
Read Fundamental and Technical Drivers Seen Equally Essential for US Rates Market
Read Fed Is Expected to Continue Raising Interest Rates
Overseas, banking stocks weighed heavily on Asian and European indexes.
More Stocks to Watch
ADRs of Credit Suisse fell more than 58% to about 84 cents. U.S.-listed shares of UBS were down 11%.
Flagstar Bank agreed on Sunday to acquire much of what was once Signature Bank. Starting Monday, Signature Bank's 40 branches will operate under Flagstar Bank. Shares of New York Community Bancorp were rising 6%.
Sangamo Therapeutics said Novartis and Biogen terminated collaboration and license agreements with the biotechnology company, which fell 10% in after-hours trading.
Forex:
The dollar rose as investors remained cautious, with equities starting the week lower despite the UBS news.
"Equity markets remaining weak...are an indication that recent market turbulence is not over yet," UniCredit said.
"This means the dollar will probably remain firm, with the dollar index (DXY) still close to 104."
Energy:
Oil futures fell close to 3% in Europe, as the UBS news failed to assuage banking concerns.
For Brent, the losses take it to its lowest level since December 2021, while WTI is at its lowest point since August 2021.
Fed officials are also set to meet this week amid uncertainty about the path of interest rates.
"Volatility is likely to linger this week, with broader financial market concerns likely to remain at the forefront," ING said.
Metals:
Gold prices rose more than 2%, breaking the $2,000 level, while base metals fell back, as the turmoil in the banking sector continued.
"Safe-haven demand, triggered by the risk-off market reaction to the banking crisis, helps explain the lift in gold futures," said Commonwealth Bank of Australia. Dollar strength will be key to gold prices, it added.
"We consider the dollar a stronger safe-haven asset than gold. That means that if risk events are large enough we will typically see markets shift from gold to the dollar."
TODAY'S TOP HEADLINES
UBS Agrees to Buy Credit Suisse for More Than $3 Billion
UBS Group AG agreed to take over its longtime rival Credit Suisse Group AG for more than $3 billion, pushed into the biggest banking deal in years by regulators eager to halt a dangerous decline in confidence in the global banking system.
The deal between the twin pillars of Swiss finance is the first megamerger of systemically important global banks since the 2008 financial crisis when institutions across the banking landscape were carved up and matched with rivals, often at the behest of regulators.
Credit Suisse's Message to Clients: 'No Need to Take Action Right Now'
Credit Suisse Group AG has told its bankers to reassure clients that it is business as usual, even as those same employees worry about job security after rival UBS Group AG agreed to buy the troubled Swiss bank.
Within 90 minutes of the two banks announcing a $3.24 billion deal on Sunday evening, Credit Suisse gave talking points designed to guide bankers and advisers on how to respond to clients' queries about the potential merger.
Signature Bank's Quirky Mix of Customers Fueled Its Rise and Hastened Its Fall
Signature Bank built a business around a collection of niches.
The New York bank juiced its growth by combining a traditional commercial real-estate business with divisions catering to customers too small or complicated for its crosstown Wall Street rivals: entrepreneurs and law firms, taxi drivers and crypto companies. Red tape was minimal and customer service was a top priority.
First Republic Bank Looms Large for U.S. Regulators After Credit Suisse Sale
U.S. policy makers warily watched the rushed rescue of Credit Suisse Group AG over the weekend, hoping that its purchase by UBS Group AG would stem a slide in financial stocks triggered by the recent collapse of two regional banks.
Late Sunday, the Fed and five major central banks announced a coordinated effort to improve liquidity by moving U.S. dollars among themselves each day, starting Monday, instead of once a week. The central banks then lend those dollars out to financial institutions, in an effort to backstop other countries' funding needs should strains emerge in global markets.
War in Ukraine Has Supercharged This German Weapons Maker
The war in Ukraine has made munitions maker Rheinmetall AG a key player in the global arms trade, catapulting the once low-profile German manufacturer into one of Europe's most important weapons suppliers.
Since Russia's invasion last year, Rheinmetall's shares have risen 150%, and the company has reported record earnings and orders, with the conflict's artillery-heavy nature pointing to strong future demand for its shells. The company also has begun talks with German and Ukrainian officials about building a tank factory in Ukraine.
TikTok's Chinese Parent Has Another Wildly Popular App in the U.S.
One of the hottest apps in the U.S. right now is TikTok's lesser-known sibling that is also owned by Chinese parent ByteDance Ltd.
App trackers show that CapCut, a video-editing tool that helps people quickly create online videos and memes, has been downloaded more in recent weeks than TikTok, the short-video sharing app that has faced rigorous scrutiny in the U.S. over ByteDance's access to user data.
Ford, GM Engage in China Price War as Car Sales Slump
HONG KONG-Auto makers and dealerships in China are slashing prices after the lifting of pandemic controls failed to reverse slumping demand in the world's largest car market.
Companies including Ford Motor Co., BMW Group and Volkswagen AG are offering deep discounts and promotions on electric vehicles after China phased out its nationwide subsidies for EVs. Others including General Motors Co. and the maker of Citroën are slashing prices on their gas-powered cars.
Labor Strife at New York Times Intensifies, Dividing Staff
Labor tensions at the New York Times are intensifying, with the publisher expressing concerns about the union's tactics in the negotiations and Times staffers taking to Slack to vent frustrations with management.
After two years and over 50 bargaining sessions, the union and management have been unable to agree on wages and healthcare benefits, among other issues.
Banks Drag Asian Shares Lower as Investors Digest UBS, Credit Suisse Deal
Bank stocks across Asia came under selling pressure Monday, as investors attempted to weigh up the outlook for the sector in the wake of UBS Group's weekend deal to acquire Credit Suisse Group.
Hong Kong's Hang Seng Index, which is dominated by banks and technology companies, was down around 3.2% in mid-afternoon trading. HSBC Holdings and Standard Chartered, two of the largest banks in Hong Kong, dropped more than 7% each.
Credit Suisse Bond-Wipeout Threatens $250 Billion Market
Credit Suisse Group AG's emergency merger with UBS Group AG will wipe out the bank's riskiest bonds, rattling investors in the quarter-trillion-dollar market for similar European bank debt.
About 16 billion Swiss francs, or about $17.3 billion, of the so-called additional tier 1 bonds will be completely written down, Switzerland's financial regulator, Finma, said in a Sunday statement. Credit Suisse also referenced the decision in a statement, saying it was informed by Finma that the bonds would be "written off to zero."
Here's why UBS's deal to buy Credit Suisse matters to U.S. investors
Thousands of miles away from U.S. shores last Wednesday, a headline began working its way across Europe, then Wall Street, sparking fresh panic as it dawned on investors that they may be facing yet another banking crisis.
Shares of Credit Suisse CS CH:CSGN would eventually sink 25% last week to a fresh record low, unable to find footing days after the head of top shareholder Saudi National Bank said they won't invest any more in the bank. By Sunday, the struggling Swiss bank had a new owner, leaving investors to wonder if at least one chapter in a current roller coaster of global banking stress can be closed.
Fed coordinates with global banks to ease dollar-funding as banking crisis intensifies
The Federal Reserve and a quintet of global central banks on Sunday announced a coordinated effort to ease a fast-growing banking crisis, in the hours after UBS announced a historic, emergency merger with troubled Credit Suisse.
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03-20-23 0555ET
