FTSE and European stocks lower as Credit Suisse says £55bn left bank before rescue

Results from collapsed bank Credit Suisse revealed the scale of the run on assets during last month’s industry turmoil. Read More...
FTSE Zurich, Switzerland - Credit Suisse, company logo on the facade of the Credit Suisse Bank headquarters on Paradeplatz in the City district of Zurich, here on the occasion of the takeover by UBS Bank. Archive photo from 20.05.2007

FTSE and European markets lower as Credit Suisse suffers flight of funds in first quarter. Photo: Getty

The FTSE 100 and European stocks opened lower at the start of a week packed with economic data and central bank meetings, as investors digest news that Credit Suisse (CS) was hit by £55bn ($68bn) in withdrawals in the first quarter.

The FTSE 100 (^FTSE) lost 0.39% to 7,883 points at the open, while the CAC 40 (^FCHI) in Paris slipped 0.22% to 7,560 points. In Germany, the DAX (^GDAXI) fell 0.10% to 15,866.

FTSE 100

The UK’s blue chip fell in early trading as weak demand outlook for crude dragged energy stocks, while a fall in metal prices pressured industrial miners on the commodity-heavy index.

BP (BP.L) and Shell (SHEL.L) lost 1.20% and 1.16% respectively, as crude prices fell over 1% on concerns over rising interest rates and the global economy.

Shares of lender HSBC (HSBA.L) edged 0.5% lower after shareholder advisory group ISS said HSBC investors should vote against a resolution by its biggest shareholder Ping An.

Read more: First-time buyers face record house prices as sales recover

Meanwhile, UK-listed companies issued 75 profit warnings in the first quarter of this year, new data from EY-Parthenon showed. This is the highest first quarter total since the early stages of the pandemic in 2020, and above the 10-year quarterly average.

£55bn left Credit Suisse in bank run

Credit Suisse said some 61bn Swiss francs (£55bn/$68.6bn) left the bank in the first financial quarter this year.

Credit Suisse’s flagship wealth management division saw the amount of assets it managed drop to 502.5bn francs at the end of March, almost 29% lower than the same period last year, Credit Suisse said in a statement.

“These outflows have moderated but have not yet reversed as of April, 2023,” it added.

Credit Suisse clients started pulling money out of the bank after it was caught up in the market turmoil that followed the collapses of Silicon Valley Bank and Signature Bank in the US in March.

It is likely to be the last time Credit Suisse will report results, as the the 167-year-old institution’s state-engineered marriage to rival UBS (UBS) is expected to be completed soon.

Investors had been eagerly awaiting the results as they seek clues to the magnitude of the challenges facing UBS.

Anke Reingen, analyst at RBC, said the first-quarter results highlighted “the challenged position Credit Suisse’s franchise is in and the work ahead for UBS taking Credit Suisse over”.

US and Asia

Across the pond, S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the red as investors await a slew of corporate earnings from big tech companies, as well as fresh economic data releases.

US stocks closed slightly higher on Friday as investors digested a final slate of corporate earnings and fresh economic data to close out the week.

The Dow Jones (^DJI) rose 0.07% to close at 33,808 points. The S&P 500 (^GSPC) climbed 0.09% to finish at 4,133 points and the tech-heavy NASDAQ (^IXIC) gained 0.11% to 12,072.

All three major averages closed the week lower. The Dow had its worst week in six weeks, snapping a four-week win streak.

US data on Thursday is expected to show first-quarter economic growth weakened after interest rate hikes to cool business activity and inflation. That might encourage the Federal Reserve to postpone or scale down more possible rate hikes at its May meeting.

Wall Street is looking ahead toward mega-cap tech earnings results this week in what will mark the halfway point of earnings season. Alphabet (GOOG), Microsoft (MSFT), Amazon (AMZN) and Meta (META) are among the high-interest names scheduled to announce their results for the first quarter.

Read more: UK retail sales shrink 0.9% but consumers more confident

In Asia, markets were broadly lower on Monday, ahead of a busy week of key economic releases in the region.

Tokyo’s Nikkei 225 (^N225) gained 0.10% to 28,593 points, while the Hang Seng (^HSI) in Hong Kong lost 1.52% to 19,771. The Shanghai Composite (000001.SS) slipped 0.93% to 3,270 points.

Investors will be closely watching the Bank of Japan monetary policy meeting later this week, the first to be led by new chief Kazuo Ueda.

Pound vs dollar

The pound (GBPUSD=X) lost some ground against the US dollar, with sterling trading at $1.2411.

However, the long game remains bullish for the pound, with year-to-date gains on the GBP/USD pair coming to over 2.8%.

Sterling (GBPEUR=X) was flat against the euro, hovering around €1.13.

Oil markets

Meanwhile, Brent crude (BZ=F) lost ground and was trading at around $80 per barrel as concerns about rising interest rates, the global economy and the outlook for fuel demand outweighed support from the prospect of tighter supplies on OPEC+ supply cuts.

“It’s unlikely that crude can bounce meaningfully absent crack expansion,” RBC Capital Markets LLC analysts said in a note.

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