As UBS acquired Credit Suisse and assurances from financial officials failed to assuage investors alarmed by a new crisis, global bank shares and oil prices fell on Monday.
Overall, however, the major European stock markets remained stable thanks to utility and heavyweight mining company price increases.
On Monday, demand from investors seeking safe havens helped gold reach its highest price in more than a year.
The price of the precious metal, which is regarded as a secure store of worth during difficult economic times, rose to $2,009.73.
Since the beginning of Russia’s assault of Ukraine a little more than a year ago, it was at its highest level.
Rupert Rowling, an expert at the trading firm Kinesis, stated that the number of additional financial institutions that must be bailed out or fail in the coming days will largely determine how much more gold can gain.
The $3.25 billion acquisition of Credit Suisse by Switzerland’s largest bank UBS, which will become the second-largest bank in the world, was essential to stop economic unrest from expanding throughout the nation and abroad, the government declared on Sunday.
However, investors were still on alert as shares of UBS and its competitors fell on Monday.
With a share price of 0.68 Swiss francs, Credit Suisse began the day almost 64% cheaper than the acquisition price.
Asian stock indexes fell significantly Monday.
Oil price decrease
Oil prices fell on worries that the fallout would slow the global economy, which was already battling to avoid recession as inflation remained high.
“If banks face tighter regulation and pressure to improve their capital ratios, it could imply that many consumers and businesses will find it more difficult to borrow money, which could feed into weaker economic activity,” Russ Mould, investment director at AJ Bell, observed on Monday.
Credit Suisse and other lenders’ shares had already plummeted last week due to fears that the failure of US regional banks would spread to the rest of the industry.
It occurred after the Swiss bank was shaken by other scandals, including its involvement in the collapses of investment firms Archegos and Greensill in 2021.
Despite the recent crisis, financial officials have rushed to reassure.
The Federal Reserve of the United States and other major central banks revealed a coordinated effort to improve banks’ access to liquidity on Sunday.
The European Central Bank described the continent’s banking system as “resilient” and “sufficiently liquid” on Monday.
The “good deal” for Credit Suisse was hailed by French Economy Minister Bruno Le Maire.
“At the same time… it’s a heavyweight in Europe, so we’ll be extremely vigilant about market reaction,” he told BFM TV.
