European Stocks Largely Higher; Credit Suisse Slumps on Hedge Fund Blow-Up

Europe

By Peter Nurse

Investing.com – European stock markets pushed to all-time highs on Monday, helped by optimism of a global economic recovery, although Credit Suisse (SIX:CSGN) slumped after warning of a “highly significant” hit to results due to its exposure to a single, unnamed client.

At 3:55 AM ET (0855 GMT), the DAX in Germany traded 0.3% higher, the CAC 40 in France rose 0.2%, while the benchmark Euro Stoxx 50 gained 0.2%, climbing to an all-time high. The U.K.’s FTSE index underperformed, falling 0.2%.

Investors are growing confident about a strong global economic rebound from the Covid-19 pandemic, led by the United States, particularly as President Joe Biden prepares to unveil a new infrastructure plan, potentially totaling as much as $ 3 trillion.

European stocks have lagged their U.S. counterparts in the past six months as new lockdowns in the continent and a relatively slow vaccination program dented the region’s economic outlook.

Despite Monday’s gains, concerns are growing that Europe’s biggest economies will have to tighten their restrictions still more, further delaying the region’s economic recovery, after France, for example, posted its highest number for Covid patients in intensive care units this year on Sunday.

French President Emmanuel Macron has defended his decision to introduce partial measures targeting high-infection zones like Paris instead of a third full lockdown, but he did acknowledge that further restrictions would probably be needed.

Meanwhile, German Chancellor Angela Merkel threatened to invoke federal emergency powers to stop the spread of the disease after the 7-day average case number hit its highest since January. In Poland, the number of new cases hit an all-time record at the weekend, while case numbers continue to rise in Belgium, the Netherlands and Austria. By contrast, Italy’s infection curve has flattened, while Czechia’s is now in sharp decline after a spike in January and February.

In corporate news, Credit Suisse stock fell over 10% after the Swiss banking giant warned of “highly significant” damage to its first-quarter results as it has taken a knock from a large U.S. hedge fund that defaulted on margin calls last week. Other bank stocks with significant prime brokerage operations were affected, with Deutsche Bank (DE:DBKGn) falling 5.6% and UBS (SIX:UBSGE) falling 3.9%. Barclays (LON:BARC) stock fell 1.7%.

Earlier Monday Japan’s biggest investment bank Nomura (T:8604) flagged a possible $ 2 billion loss at a U.S. subsidiary, which the bank said stemmed from transactions with a U.S. client.

Hugo Boss (DE:BOSSn) stock slipped 0.5% after the German fashion house became embroiled in the spat between China and the West over accusations of forced labor in Xinjiang.

Oil prices retreated Monday as the container ship stuck in the Suez Canal was partially refloated, raising the possibility that it may be freed in the near future, unblocking the key waterway.

Prices had risen more than 4% on Friday as traders tried to weigh the impact of the blockage of such a key route for global trade, through which with around 10% of global seaborne oil trade passes.

U.S. crude futures traded 1.5% lower at $ 60.07 a barrel, while the Brent contract fell 1% to $ 63.80. However, despite these losses, both benchmarks are still set to post a fourth consecutive quarterly gain this week.

Elsewhere, gold futures fell 0.3% to $ 1,727.25/oz, while EUR/USD traded 0.1% lower at 1.1789.

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