Marketbites: Banks in Talks to Bolster First Republic Deposits
Portfolio Manager Commentary:
Stocks rose Thursday as a report of banks considering plans to help closely followed First Republic Bank buoyed investor optimism amid the banking crisis. The Nasdaq Composite advanced 2%, as investors bought technology stocks on hopes that the crisis could push the Federal Reserve to shift its outlook on monetary policy at its meeting next week.
First Republic shares cut their steep decline and turned positive as CNBC’s David Faber reported that a group of banks were in talks to deposit around $30 billion in First Republic, citing sources. The vote of confidence turned the market higher, while the SPDR S&P Regional Banking ETF (KRE) ETF was last up 2.9%. First Republic shares were last up 6.3%.
All three indexes are on pace to end the week higher than where they began, led by the Nasdaq Composite with a 5% advance.
Chart of the Day:
Credit Suisse Group AG, said it would borrow up to 50 billion Swiss francs, equivalent to $53.7 billion, from the Swiss central bank to shore up its liquidity, capping a day in which fears about the health of global banks leapfrogged to Europe from North America and the giant lender’s shares dropped 24%. “These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders,” Chief Executive Officer Ulrich Koerner said. Credit Suisse’s plans mark the latest bombshell in a week full of them, as global banks struggle to fend off growing concerns that they and their overseers haven’t sufficiently prepared for a world characterized by high inflation, high interest rates and high investor anxiety.