Credit Suisse lifeline, ECB decision, Philly Fed - what's moving markets

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Credit Suisse lifeline, ECB decision, Philly Fed - what's moving markets
Credit: © Reuters.

By Geoffrey Smith -- The Swiss National Bank hands Credit Suisse a $54 billion lifeline, causing a sharp rebound in its stock and bonds, and bringing forth a sigh of relief from global equity markets. The European Central Bank has to decide whether or not it can afford to press ahead with its plans for a 50-basis-point hike in Eurozone interest rates. The Philadelphia Fed's business survey and weekly jobless claims will provide a cross-check against a significant weakening in retail sales and producer price inflation. FTX's new management says Sam Bankman-Fried and his friends drained over $3B from FTX - and that's before what they spent on U.S. politicians and luxury property in the Bahamas. And oil prices bounce off new lows. Here's what you need to know in financial markets on Thursday, 16th March.

1. Credit Suisse gets $54B lifeline

The Swiss National Bank (SIX: SNBN ) gave Credit Suisse a $54B credit line, shoring up confidence in the battered lender. In a joint statement, the SNB and Swiss regulator FINMA said the bank has enough capital and liquidity to survive and said there should be no risk of contagion from the volatility seen in the U.S. banking sector over the last week.

Credit Suisse (SIX: CSGN ) stock almost completely reversed its record one-day drop it had made on Wednesday, after its biggest shareholder, Saudi National Bank (TADAWUL: 1180 ), had said it wouldn't commit more equity to the Swiss institution. Saudi National Bank's chairman rowed back his comments overnight, telling CNBC that the bank was "fine" and didn't need any more capital anyway.

European stock markets also recovered, quelling fears of CS infecting the rest of the European banking sector, but U.S. futures and Asian markets were still unimpressed.

2. ECB's dilemma

Credit Suisse's woes create an acute dilemma for the European Central Bank, which will release its latest policy decisions at 09:15 ET (13:15 GMT). The ECB had previously signaled an intention to raise its key rates by 50 basis points and to raise them further at subsequent meetings.

At least, the second half of that guidance now seems moot. The big question is now whether it will go ahead as planned or pause its hikes to let the current volatility blow over, or steer a course between those two options with a 25 basis point hike.

The ECB is boxed in: On the one hand, inflation is still running well above its 2% target, and its new forecasts are set to show it staying so for another two years. On the other, bank officials will be painfully aware of their mistake in hiking into the 2008 financial crisis, making it worse than it would otherwise have been.

3. Stocks inch down, unconvinced by CS rescue; Philly Fed, jobless claims and housing starts, all due

U.S. stock markets are set to open lower, with risk aversion still dominant ahead of the ECB's move. It appears the SNB's credit line for Credit Suisse won't be enough to calm nerves over the outlook for U.S. regional banks: First Republic (NYSE: FRC ), PacWest Bancorp (NASDAQ: PACW ), and Zions Bancorporation (NASDAQ: ZION ) are all down heavily again in premarket trading, although losses are more modest at others that have come under pressure in recent days.

By 06:45 ET, Dow Jones futures were down 117 points or 0.4%, while S&P 500 futures were down 0.3%. Nasdaq 100 Futures were slightly higher, however. Meta (NASDAQ: META ) and Snap (NYSE: SNAP ) continue to gain on news of the U.S. preparing to force a sale of viral video app TikTok on national security grounds, while Adobe (NASDAQ: ADBE ) was higher after giving strong guidance for the current quarter and year late on Wednesday.

After the marked weakening of producer price inflation and retail sales in February, reported on Wednesday, there will be added interest in the Philadelphia Federal Reserve's business survey , due out at 08:30 ET. At the same time, there will also be weekly jobless claims data and February's data for housing starts and building permits .

Dollar General (NYSE: DG ) is already out with figures that missed forecasts , while Williams-Sonoma (NYSE: WSM ) and FedEx (NYSE: FDX ) report after the closing bell.

4. How much, did you say?

Sam Bankman-Fried and his inner circle siphoned off $3.2B from cryptocurrency exchange FTX before its collapse in November, according to new documents released late Wednesday by the company's bankruptcy administrators. Bankman-Fried alone received $2.2B, while his most senior associates, Nishad Singh and Gary Wang, received over $800 million combined. Pity poor Caroline Ellison, Alameda Research's former CEO, who was fobbed off with a paltry $6 million.

The figures don't include the money that FTX itself spent on luxury property in the Bahamas and on political donations in the U.S. and elsewhere, the filing said. John Ray and his team are still trying to recover what's salvageable but said there could be no guarantee that the money can be clawed back.

5. Crude off lows after SNB action

Crude oil bounced weakly off a 16-month low after the Swiss National Bank's action to support Credit Suisse, but concerns about the global economy are preventing any serious rebound.

By 07:00 ET, U.S. crude futures were down 0.2% on the day at $67.20, having earlier touched a low of $65.65 a barrel. Brent was down 0.2% at $73.53 a barrel. The move reflected in part an easing of geopolitical risk premiums, in the wake of Iran's decision to re-establish diplomatic relations with Saudi Arabia earlier this week under a deal brokered by China. Under that deal, Iran will stop covert weapons shipments to Houthi rebels in Yemen, the Wall Street Journal reported.

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