Global markets recover after US lenders bailed out First Republic Bank
Pedestrians in the Pudong Lujiazui financial district in Shanghai, China, on January 3. (Qilai Shen/Bloomberg/Getty Images)
Markets in Europe and Asia rallied on Friday after First Republic Bank was bailed out by a group of major US lenders, easing concerns over the ongoing banking crisis.
“Some optimism has returned to markets in the last 24 hours, with bank shares stabilizing on both sides of the Atlantic,” Deutsche Bank analysts said in a note on Friday.
European stocks posted gains on Thursday as investors were reassured by the news that Credit Suisse would take advantage of a lifeline offered by the Swiss National Bank, borrowing up to 50 billion Swiss francs ($53.7 billion).
The rally in Europe lasted until Friday, although the gains were modest. The benchmark Stoxx Europe 600 index rose 0.3% in early trading. Germany’s DAX and France’s CAC 40 rose 0.4% and 0.07% respectively.
Europe’s Stoxx Europe 600 Banks Index, which tracks 42 major banks in the EU and the UK, also opened higher, before trading flat by mid-morning. The index had fallen 13% in the week to Thursday’s close.
London’s FTSE 100, with many banks, rose 0.6%.
But Credit Suisse shares fell as much as 5% in early trading, absorbing gains made on Thursday, in a sign that investor confidence in the bank’s future has not been fully restored.
In Asia, Hong Kong’s Hang Seng closed 1.64% higher, China’s Shanghai Composite gained 0.73%, Japan’s Nikkei rose 1.2% and South Korea’s Kospi added. 0.8% at market close. The increases followed larger falls on Thursday.