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A stock exchange trader at the German Stock Exchange. Alamy Stock Photo

European stock markets plunge as Credit Suisse stock drops to historic low

Eurozone equities tumbled more than 3% in value and the euro lost 1% against the dollar.

EUROPE’S STOCK MARKETS and the euro have slumped on renewed fears of contagion following the collapse of Silicon Valley Bank.

The main US crude oil contract, WTI, slid under $70 per barrel for the first time since December 2021.

Eurozone equities tumbled more than 3% in value and the euro lost 1% against the dollar.

In Switzerland, Credit Suisse stock plunged more than 20% to strike record lows.

Shares in Switzerland’s second-biggest bank hit 1.73 Swiss francs after the Saudi National Bank chief ruled out upping the key shareholder’s stake in the Zurich-based lender, which has been rocked by repeated scandals.

“The financial sector in Europe is under significant turmoil today as a result of SVB’s fallout,” noted Naeem Aslam, chief investment officer at Zaye Capital Markets.

It follows the demise over the weekend of US lenders SVB and Signature Bank – the biggest casualties since the global financial crisis of 2008.

Having slumped at the start of the week, global equities recovered yesterday and in Asia today before Europe’s latest slump. 

credit-suisse-canary-wharf-london-uk-credit-suisse-group-ag-london Alamy Stock Photo Alamy Stock Photo

Bank shares tumbled across Europe, with Germany’s Commerzbank and France’s Societe Generale and BNP Paribas shedding more than 10 percent. British lender Barclays gave up about 7%.

“What began as a regional banking crisis in the US has suddenly morphed into a European one,” said IG analyst Chris Beauchamp.

“Surely the ECB are not going to hike yet again just as the crisis intensifies,” he told AFP.

The European Central Bank is poised to raise interest rates again today to tackle high inflation, but the banking crisis has fuelled concern about the health of the sector as borrowing costs increase.

“While the European Central Bank is seen have already pre-committed itself to a 50 basis-point rate hike tomorrow, this won’t support the euro if concerns over the health of the financial sector remain dominant,” added Rabobank analyst Jane Foley.

Speaking to reporters in Washington DC today, Taoiseach Leo Varadkar said he does not envisage another banking crisis either in the US or Europe. 

“We’re certainly managing and monitoring the situation very closely. But we’re not concerned about the stability or health of any of our banks. There are a number of large tech companies that are affected by what’s happening here [in the US]. We are monitoring that extremely closely,” he said. 

Addressing the issue of Meta losses in Ireland, he said the Irish government received notification from Meta of a number of further job losses.

He said he wanted to extend his sympathies to those affected and assure them that the government is going to be there with them to make sure that they get the help they need in terms of income supports or training opportunities and help to set up a new business if they want. 

“I’m not going to put the number on it, but it’s a relatively small number, but it’s up to Meta to talk to their own staff about that, it wouldn’t be right for me to put a number on that today.

“I think what we’re seeing across the tech sector is retrenchment. It’s an industry that grew extremely fast, particularly during the pandemic period.

“Now, what we are seeing in those companies is them scaling back by about 5% or 10%. And that still means that a lot of tech companies are hiring, it still means that there are a lot of vacancies in the tech sector, and it still means that in the medium to long term I think we’ll see these industries grow again,” the Taoiseach said. 

With reporting by Christina Finn in Washington DC 

– © AFP 2023

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