SINGAPORE, Mar 20 (Reuters) – US stock futures rose in Asian trading on Monday on relief over a weekend bailout deal for Credit Suisse, although sentiment was jittery and financial stocks remained on contagion fears despite support from global central banks .
S&P 500 futures were up 0.5% in choppy early trade. Japan’s Nikkei futures rallied 0.6%.
FX markets were broadly stable while US interest rate futures fell as investors pushed US interest rate expectations slightly higher ahead of a Federal Reserve meeting on Wednesday.
US Treasury futures fell and leading indicators pointed to a volatile day for cash.
On the equities side, losses in Australian bank shares caused the S&P ASX 200 (.AXJO) to fall 0.8% in morning trade, while the financials index (.AXFJ) fell 1.4%.
In just over a week, the fallout from the collapse of Silicon Valley Bank – which has shaken confidence in the banking system – has brought a global systemically important lender to its knees.
Over the weekend, UBS announced it would buy Credit Suisse for 3 billion francs ($3.2 billion) and take on up to $5.4 billion in losses, in a shotgun merger orchestrated by Swiss authorities.
Central banks including the Fed, European Central Bank and Bank of Japan pledged to deepen support for liquidity by increasing the frequency of seven-day dollar swap operations from weekly to daily.
“The best we can say is that there are certainly many concerns about Credit Suisse’s risk of contagion,” said Rodrigo Catril, a senior currency strategist at National Australia Bank in Sydney.
“The news from Switzerland overnight helped,” he said, but added that the central bank’s moves had both calmed and created jitters.
“It’s the irony of good news reflecting how bad things are. It’s great that we’re seeing this concerted effort by central banks and it’s positive, but it also shows how worrying the circumstances are and how concerned central banks appear to be as well.”
At least two major banks in Europe are reviewing contagion scenarios in the region’s banking sector and expect stronger signals of support from the Fed and ECB, two senior executives close to the talks told Reuters.
Concern about regional banks in the United States also remains high. On Sunday, the credit rating of First Republic (FRC.N) was pushed deeper into junk status by S&P Global and elsewhere, efforts to raise capital are encountering difficulties.
June futures on the US 10-year Treasury fell 19 ticks in early trade as investors scramble to gauge what measures to curb bank jitters mean for global interest rates.
The pricing implies about a 60% chance of the Fed raising rates at its meeting later in the week, but has also priced in several rate cuts through the end of the year.
In forex trading, the Swiss franc, which suffered amid growing concerns over Credit Suisse last week, rose about 0.4% to 0.9264 against the dollar.
The yen was trading steady at 131.87 per dollar. The euro rose 0.1% to $1.1067.
reporting by Tom Westbrook; Editing by Sam Holmes
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