Market SPotlight: Credit Suisse Shares Under Pressure Despite SNB Funding
Credit Suisse Still In Trouble
Price action in troubled Swiss lender Credit Suisse’s shares suggest that the bank Is not yet out of the woods, despite securing CHF 50 billion in emergency funding from the SNB. Despite banking stocks trading broadly higher on the back of news that a consortium of US banks have bailed out struggling First Republic Bank, Credit Suisse shares are lower again ahead of the open today.
As part of the bailout from the SNB, Credit Suisse detailed that it would buyback around $3billion in debt to help bolster liquidity ratios. Still, despite these moves, fears over the health and longevity of the bank appear to be just as fresh in investors minds (and likely those of speculators too) with the bank’s share price failing to take part in the broader risk-on rally we’ve seen.
CDS Pricing Reflects Investor Fear
Interestingly, prices on the bank’s bail-in bonds have failed to recover much while the cost of default swaps on the bank have risen, now almost double what they were at the start of the week. The move in default swap pricing particularly shows that investors are still highly fearful of a default.
Technical Views
CS
Following the breakdown below the 2.91 level CS shares extended as low as a test of the bear channel lows. 1.73 is the current low print. While price has bounced off the bear channel lows for now, tone remains heavy and until we see a break of the 2.91 level and channel top, the outlook remains skewed towards further losses.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.