Focus on Fed and BoE rate decision amid bank rout

The bailout of Credit Suisse by the Swiss National Bank and the $30 billion rescue package sent by eleven US banks to First Republic fueled worries about the banking sector on Friday. The FTSE 100 fell 1%, while the yield of UK Gilts fell by 14bps. For the week, the blue-chip index lost 5.3%, and was still down 0.8% this morning.

Over the weekend, it was announced that UBS has agreed to buy Credit Suisse for $3.2 billion, in a deal pushed by the Swiss government.

British banks are among the worst performers today, with HSBC and Standard Chartered falling 3.7% and 4.9%, respectively.

Energy majors are also weighing on the index, tracking a decline of more than 2% in oil prices.

Investors are now focusing on the Fed meeting starting tomorrow, with investors betting on a 0.25% rate hike or even no rate hikes at all. The Bank of England will also released its decision on rates this week.

 

Things to read today:

Holders of $17bn of Credit Suisse bonds wiped out under UBS takeover (Financial Times)

Credit Suisse’s Message to Clients: ‘No Need to Take Action Right Now’ (WSJ)

BOE Rate Decision Set to Cap Tumultuous Week for UK and Sunak (Bloomberg)