Dow futures climb more than 100 points after UBS buys Credit Suisse to stem banking crisis: live updates

US stock futures rose on Sunday as the Swiss government planned a forced takeover of Credit Suisse by UBS in the latest attempt by governments around the world to quell a crisis threatening the banking sector.

Dow Jones industry average futures rose 118 points, or 0.3%. S&P 500 futures And Nasdaq 100 futures increased by 0.3%.

Investors remained nervous as the week’s trading began as regional banks remained under pressure to shore up their deposit bases following the collapse of Silicon Valley Bank earlier this month. Wall Street reckons more may need to be done to restore confidence in the banking system after US regulators bailed out SVB’s uninsured deposits and offered new funding to troubled banks a week ago.

Instability in the financial sector over the past two weeks raised the stakes for Wednesday’s Federal Reserve interest rate decision. As of Sunday night, the Fed says there’s about a 62% chance of a quarter-point hike CME Group data Using Fed Funds futures contracts as a guide. The other 38% are in the no-hike camp, expecting Chairman Jerome Powell to start easing his aggressive tightening campaign that began in March 2022 as financial contagion erupts.

UBS agreed to buy Credit Suisse for 3 billion Swiss francs, or $3.2 billion, with the combined bank expected to have $5 trillion in assets. Credit Suisse shares are down 21% last week. Shortly after UBS announced its takeover deal, the Fed said announced it had joined forces with other central banks in a joint liquidity operation. The group of central banks — including the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank — agreed to increase the frequency of their U.S. dollar swap line arrangements from weekly to daily increase.

UBS’s takeover of its struggling competitor is “clearly good for the broader concerns about the stability of the global banking sector,” according to Art Hogan, chief market strategist at B. Riley Wealth Management.

However, traders might be anxious for regulators to do more to stem the decline in regional banks. Shares of First Republic closed 72% lower last week, even after a group of banks on Thursday pledged to inject $30 billion into the San Francisco institution that has become the hub of Wall Street. The SPDR Regional Banking ETF (KRE) down 14% last week.

Despite worries about bank stocks, the S&P500 And Nasdaq Composite ended the week higher as investors switched back to technology stocks that could benefit from a lower interest rate environment. Meanwhile, the Dow is down 0.15% this week.

“I think there’s been an overreaction to the regional banks… And that probably represents an opportunity,” Hogan said.

“As we move into a new week, we’re likely to see a bid for both the big money center banks and the energy complex in a big way because I think there’s been some heavy overreaction in the market,” Hogan added added.

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