The upheaval in financial markets showed few signs of abating on Thursday, as investors weighed whether the turmoil in the banking industry in the United States and Europe would drag down the global economy.
In the early hours of the day in Zurich, Credit Suisse — “a global systemically important bank” in its own words — said it would tap a lifeline from the Swiss central bank and borrow up to $54 billion dollars. Futures contracts on the Euro Stoxx 50 benchmark jumped more than 2 percent on the news, a sign that battered European stocks could rebound when trading opened later in the day. Futures on the S&P 500 were also higher.
But stocks in Asia were in the red, with Japan’s Nikkei 225 and Hong Kong’s Hang Seng Index each falling by more than 1 percent. In South Korea, regulators warned lenders to brace for the fallout from the collapse of Silicon Valley Bank and said that they may order local lenders to secure more capital.
The issues plaguing Silicon Valley Bank and Credit Suisse, which has been reeling from years of mismanagement, are very different. Their struggles, though, have raised fears that there are more unseen risks in the financial industry. For many investors, the next trigger may come in a few hours, at the European Central Bank’s meeting in Frankfurt.
The bank had been set to raise interest rates again to counter rising prices. But the calculus has changed in a matter of days after three banks collapsed in the United States in less than a week, partly because they underestimated the impact of rapidly rising interest rates.
“With the emergence of companies and financial institutions unable to withstand the rapid rise in interest rates, the E.C.B. now faces the same situation confronting U.S. authorities and must choose between tackling inflation and stabilizing the financial system,” Yunosuke Ikeda, an analyst at Nomura, a Japanese bank, wrote in a report on Thursday.
Jin Yu Young contribued reporting.