US, European stocks rise as banking crisis fears ease after Credit Suisse-UBS deal

UBS Group AG on Sunday announced that it has agreed to buy Credit Suisse Group AG  for 3 billion Swiss francs in a Swiss government-brokered deal aimed at containing the global banking crisis.

The S&P 500 rose 0.9% on Monday. The Dow Jones Industrial Average gained 1.20%. The Nasdaq added 0.39%.

The S&P Banking index edged up 0.6%. First Republic Bank shares tumbled 47.1% after S&P Global cut its credit rating to ‘B’ from ‘BB’ on Sunday. 

US treasury yields rose ahead of the Federal Reserve meeting this week. The yield on 10-year treasury gained 5 basis points to 3.48%.

Regulators in the US and Europe have tried to calm fears over global banking crisis.

The European Central Bank (ECB) on Monday said Europe’s financial system is “resilient” with sufficient liquidity.

US treasury secretary Janet Yellen and US Federal Reserve chair Jerome Powell on Sunday said they “welcomed” the Credit Suisse deal, and also said that the capital and liquidity of US banks is strong.

After the Credit Suisse-UBS deal, investors’ focus will be on Fed’s decision on interest rate at this week’s meeting.

The global banking crisis started after two US banks– Silicon Valley Bank and Signature Bank– collapsed this month.

Shares of e-commerce giant Amazon fell 1.3% following the announcement to cut another 9,000 jobs. 

European stocks

Stocks in London, Frankfurt and Paris opened more than 1% lower on Monday.

The European STOXX 600 index closed 0.98% higher.

Germany’s DAX climbed 1.1% at 14,933.38. France’s CAC 40 surged 1.3% at 7,013.14. Britain’s FTSE 100 rose 0.9% at 7,403.85.

European banks pared losses, climbing 1.3% after initially declining 6%.

Shares of Credit Suisse plummeted 55.7%. UBS shares reversed its 13% loss and rose 1.3%.

Asian shares

Asian shares closed down on Monday on fears of contagion of banking crisis.

Hong Kong’s Hang Seng index slid 2.7%. The Shanghai Composite index lost 0.5% at 3,234.91. South Korea’s Kospi retreated 0.7% at 2,379.20.

The Nikkei 225 in Tokyo shed 1.4% at 26,945.67.

Australia’s S&P ASX 200 lost 1.4% at 6,898.50.

India’s Sensex fell 1.3% at 57,241.4.

Bullion 

Gold prices rose to one-year high earlier in the day but later fell in a choppy trade. Spot gold dropped 0.46% to $1,978.83 an ounce, after touching $2,009.59 an ounce.

Oil prices

West Texas Intermediate crude futures surged 1.09% to $67.47 a barrel. Brent crude rose 1% to $73.7.