Stock futures were mixed early Thursday morning as US investors turned their attention to developments in Europe ahead of a key announcement from the European Central Bank following Wednesday’s turmoil at Credit Suisse and overnight intervention by the Swiss National Bank.
As of 8:45 a.m. ET, Dow futures are down about 0.3%, S&P 500 futures are down 0.2%, while Nasdaq futures are flat.
The ECB will announce its latest monetary policy decision at 9:15 am ET, followed by a press conference by ECB President Christine Lagarde half an hour later.
Investors are expecting the ECB to hike rates by 0.25%, but this week’s banking system turmoil – which made its way to European shores on Wednesday in the form of the Credit Suisse crisis – has planned central bank tightening action inflation challenged by raising interest rates.
“FOMC members probably haven’t decided what to do next week given the volatility in the markets,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a statement Thursday. “But yesterday’s collapse in Credit Suisse stock and, more importantly, the loss of liquidity in the Treasury market on top of the SVB, Silvergate and Signature bankruptcies makes it more likely that they will refrain from raising rates.
“In our view, not risking the stability of the system is more important than reaffirming its determination to fight inflation,” Shepherdson added.
Late Wednesday, Credit Suisse announced it would borrow up to 50 billion Swiss francs, or about $54 billion, from the SNB.
Credit Suisse shares fell as much as 30% on Wednesday after its biggest investor, the Saudi National Bank, announced it would not increase its stake in the problem bank, citing regulatory challenges to increase its stake above 10%.
Credit Suisse shares trading in New York rose about 5% in premarket trading on Thursday.
In the US economic data, the latest weekly report on initial jobless claims showed a drop in initial jobless claims to 192k from 212k the previous week, suggesting continued strength in the US jobs market.
This report serves as one of the last notable economic data ahead of the Federal Reserve’s two-day monetary policy meeting that begins next Tuesday, at which the central bank is due to announce its latest monetary policy decision on Wednesday afternoon.
markets are now Putting about 75% odds on the Fed raising interest rates by 0.25% at its monetary policy meeting next week, down from expectations of a 50 basis point rate hike ahead of last week’s turmoil in the banking system.
Investors will also be watching closely for Treasury Secretary Janet Yellen’s testimony, which is scheduled to address the Senate beginning at 10:00 a.m. ET. In prepared remarks released ahead of Yellen’s appearance, the Treasury Secretary said the US banking system remains “healthy.”
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Source : finance.yahoo.com