Troubles at the Swiss banking giant Credit Suisse spooked markets Wednesday, causing bank stocks to sell off after regaining some ground Tuesday.
The sell-off was sparked in part when Credit Suisse’s largest shareholder, Saudi National Bank, said publicly that it wouldn’t beef up its investment to help steady the embattled lender. Credit Suisse shares took a roughly 25% nosedive Wednesday to hit a record low.
Shares in Citibank were down as much as 5%, while Goldman Sachs, JPMorgan and Wells Fargo were each down roughly 4% Wednesday. Bank of America’s stock was trading about 3% lower.
The Dow and S&P indexes were both down by more than 1.4% Wednesday morning, with the tech-heavy Nasdaq trading at least 1% lower. Even the markets for assets typically considered safe, such as U.S. government bonds, were also down sharply.
The broad-based jitters in Europe and the United States, which come days after American regulators took over and shut down two banks, have kicked up fresh worries about troubles in the global financial sector.
Some of that shakiness is to be expected, analysts say, since banking around the world is so interconnected and because investors eyeing instability in one part of the industry tend to scan the horizon for other threats — and to reflect those concerns in their stock trades.
“Credit Suisse is not just a Swiss problem but a global one,” Andrew Kenningham, chief Europe economist at the Capital Economics research and consulting group, warned clients in a note Wednesday.
That is partly because Credit Suisse is so large — with $574 billion in assets, it is more than twice as big as Silicon Valley Bank — and partly because it has long been seen as the “weakest link among Europe’s large banks,” he wrote.
Source: | This article originally belongs to Nbcnews.com
