Stocks in Europe steady

Despite coordinated efforts by central banks to increase the flow of US dollars through financial markets and the emergency rescue of Credit Suisse by UBS, bank shares in Europe remained down on Monday. However, stocks in the region rebounded from earlier losses, with the Stoxx Europe 600 index up 0.3%, Germany’s DAX up 0.6%, France’s CAC 40 up 0.7%, and London’s FTSE 100 up 0.3%. Additionally, US futures were also slightly higher.

In contrast, the Stoxx Europe 600 Banks index, which tracks 42 large EU and UK banks, fell 1.6%, with HSBC and Standard Chartered in Hong Kong trading experiencing significant declines. Shares in UBS, which announced on Sunday that it would buy Credit Suisse for $3.25 billion, also fell 8.8%. Credit Suisse shares plummeted 60% in mid-morning trade, in line with the value of UBS’s offer, and other European banks weakened as well.

The deal between UBS and Credit Suisse was intended to calm market panic following the failures of two US banks earlier in the month. However, investors were unsettled by the losses incurred by owners of $17 billion worth of Credit Suisse bonds as one of the rescue’s conditions.

Despite the rebound in some stock markets, the ongoing uncertainty surrounding banks in Europe and beyond is causing concern among investors. This comes as the COVID-19 pandemic continues to have a significant impact on economies and businesses worldwide, with many experts predicting a prolonged global recession. As the situation develops, it remains to be seen what further measures will be taken to support the financial industry and stabilise markets.

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