Volkswacht Bodensee - Banking shares battered as global markets wobble on contagion fears

After a rebound on Tuesday, equities fell again on Wednesday, with Europe's main indices closing more than three percent in the red as shares of Credit Suisse plunged nearly 25 percent.

Switzerland's second-biggest bank, shaken by a series of scandals, was rocked once more after Saudi National Bank chairman Ammar Al Khudairy, its main shareholder, said it would "absolutely not" up its stake.

Global markets have been rattled by the collapse of tech sector lenders Silicon Valley Bank and Signature Bank, the sector's biggest failures since the 2008 financial crisis.

"I'm getting the sense it's very emotional trading," said Cresset Capital's Jack Ablin. "So investors are on high alert for any news that could be disappointing or just anything particularly related to the banks."

Major US indices also spent most of the session sharply negative, but the Nasdaq popped into positive territory at the end of the day after the Swiss National Bank said Credit Suisse had adequate capital, but that it was ready to make liquidity available to the institution if needed.

The Dow Jones Industrial Average ended at 31,874.57, down 0.9 percent, but nearly 450 points above its session low.

Bank shares tumbled across Europe, with British group Barclays, Germany's Commerzbank, France's BNP Paribas and Societe Generale shedding between seven and 12 percent.

"What began as a regional banking crisis in the US has suddenly morphed into a European one," said IG analyst Chris Beauchamp.

But US banks also had a bad day, with giants like JPMorgan Chase and Citigroup losing around five percent and the embattled midsized lender First Republic Bank slumping 21.4 percent.

- ECB in focus -

The euro fell as much as 1.8 percent against the dollar, its steepest daily drop since March 2020.

The greenback prospered from a "flight to quality" as investors retreat from risk and expectations shift for the European Central Bank's policy decision on Thursday.

The ECB had been expected to hike interest rates by a half percentage point due to inflation.

But with problems showing in European banks, "there's a question mark as to whether they'll deliver that and –- if they do –- there's worry about what might happen next," said James Stanley, a strategist at Forex.com.

Oil tumbled as much as seven percent on recession fears. US benchmark West Texas Intermediate ended at $67.61 a barrel, down 5.2 percent, its lowest level since December 2021.

Petroleum-linked shares also fell sharply, with Chevron dropping 4.3 percent and Halliburton and Transocean both slumping around 9.0 percent.

- Key figures around 2050 GMT -

New York - Dow: DOWN 0.9 percent at 31,874.57 (close)

New York - S&P 500: DOWN 0.7 percent at 3,891.93 (close)

New York - Nasdaq: UP 0.1 percent at 11,434.05 (close)

London - FTSE 100: DOWN 3.8 percent at 7,344.45 (close)

Frankfurt - DAX: DOWN 3.3 percent at 14,735.26 (close)

Paris - CAC 40: DOWN 3.6 percent at 6,885.71 (close)

EURO STOXX 50: DOWN 3.5 percent at 4,034.92 (close)

Tokyo - Nikkei 225: FLAT at 27,229.48 (close)

Hong Kong - Hang Seng Index: UP 1.5 percent at 19,539.87 (close)

Shanghai - Composite: UP 0.6 percent at 3,263.21 (close)

Euro/dollar: DOWN at $1.0578 from $1.0733 on Tuesday

Pound/dollar: DOWN at $1.2055 from $1.2158

Euro/pound: DOWN at 87.71 pence from 88.28 pence

Dollar/yen: DOWN at 133.45 yen from 134.22 yen

West Texas Intermediate: DOWN 5.2 percent at $67.21 per barrel

Brent North Sea crude: DOWN 4.8 percent at $73.69 per barrel

burs-jmb/bys

M.Ouellet--BTB