European stock futures surge higher; Credit Suisse shores up position

By Peter Nurse 

Investing.com - European stock markets are expected to open firmly higher Thursday as embattled lender Credit Suisse moved to shore up its liquidity position ahead of a European Central Bank policy-setting meeting.

At 03:00 ET (07:00 GMT), the DAX futures contract in Germany traded 1.4% higher, CAC 40 futures in France climbed 0.4%, while the FTSE 100 futures contract in the U.K. rose 1%.

Credit Suisse (SIX:CSGN) announced late Wednesday plans to borrow as much as CHF 50 billion ($1 = CHF 0.9297) from the Swiss National Bank, a move the Swiss bank described as "decisive action to pre-emptively strengthen its liquidity".

The bank’s shares plummeted to a record low on Wednesday as its main investor, Saudi National Bank, said it was unable to provide more funding to the lender, which has struggled with hefty customer outflows after a string of scandals in recent years. 

It also followed the recent collapse of three U.S. regional banks, most notably Silicon Valley Bank.

The difficulties in the global banking sector has put the spotlight on the European Central Bank’s meeting later in the session.

The ECB had previously signaled the likelihood of another interest rate increase of 50 basis points as underlying Eurozone inflation remained elevated, but the banking turmoil moving closer to home could prompt the policy makers to opt for a more cautious stance.

The market now sees a 25 basis point hike as the most likely outcome later Thursday, a dramatic repricing from the near certainty of a 50 bp hike at the start of the week.

ECB President Christine Lagarde is sure to be asked at the subsequent press conference how the central bank can balance efforts to deliver price stability while safeguarding financial stability.  

In corporate news, aside from the banking sector, investors may also be keeping an eye on Holcim (SIX:HOLN), after the Swiss building materials company said earlier Thursday it has acquired HM Factory, a Polish concrete supplier for an undisclosed sum.

Quarterly earnings are expected from the likes of Italian energy giant Enel (BIT:ENEI) and food delivery company Deliveroo (LON:ROO).

Oil prices traded higher Thursday, rebounding from 15-month lows as the financial lifeline to Credit Suisse helped boost risk sentiment, diluting concerns that a full-blown banking crisis would stymie global economic activity.

By 03:00 ET, U.S. crude futures traded 0.6% higher at $68.02 a barrel, while the Brent contract rose 0.7% to $74.22. 

Both benchmarks have slumped around 10% this week, falling to their lowest levels since December 2021.

Additionally, gold futures fell 0.6% to $1,919.10/oz, while EUR/USD traded 0.3% higher at 1.0601.