STOXX down 2.5%, volatility spikes
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Credit Suisse plummets
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Eyes on UK budget
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U.S. futures fall sharply
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EUROPE'S BANK CARNAGE BURNS 120 BLN EUROS (1154 GMT)
Banks' market troubles ain't over. Investors are now stressing over Credit Suisse after its top Saudi shareholder said it could not provide any more financial assistance to the loss-making Swiss bank.
That re-ignited wider concerns over the global banking system, just days after the collapse of U.S. regional bank Silicon Valley Bank, sending shivers through equity, forex and bond markets.
With Credit Suisse trapped in a downward spiral, down 25% at one point, European banks are at back at the epicentre of market stress. Since last Wednesday's close, Europe's banking index has lost more than 120 billion euros in market value, almost equal to the size of the index's top bank HSBC.
SVB COLLAPSE: TOO SOON TO SOUND THE ALL-CLEAR (1021 GMT)
The calm across markets earlier today has vanished. Banking stocks are under pressure after the biggest backer of Swiss lender Credit Suisse said they could not provide any more financial assistance.
Analysts had already said it might have been be too soon to sound the 'all clear,' as more troubles might come from U.S. regional banks.
The fear is that depositors in "less regulated banks will choose to migrate deposits to more highly scrutinised, highly regulated, and better-capitalised banks," ING analysts say in their daily forex report.
They mention media reports saying $15bn of deposits have flowed to Bank of America, one of the Financial Stability Board's 30 Global Systemically Important Banks (G-SIBs).
The White House is carefully monitoring developments at First Republic and other smaller banks, while the Federal Reserve is considering tougher rules and oversight for midsize lenders.
"Investors will probably continue to monitor the stock prices of these U.S. regional banks for signs of stress and might also gain some insights on deposit flight by Thursday's release of Federal Reserve borrowing data," ING analysts add.
The S&P 500 regional banks index rebounded yesterday after a 26% loss over three sessions.
STOXX DROPS, FINANCIALS DRAG, INVESTORS GO DEFENSIVE (0925 GMT)
The steady start for European equities didn't last long. After about an hour of trading, the STOXX 600 is heading south again, down almost 1%, dragged down by renewed losses across financials.
No wonder then that loss-making Credit Suisse is again under heavy pressure, down more than 8% to a new lifetime lows, with CDS prices at distressed levels. Banks are top fallers, down 2.2%.
Energy too is a heavy faller, down more than 2%, while typical defensive sectors are resisting the downward trend. Telecoms, utilities and healthcare are posting small gains.
Here's your opening snapshot:
EUROPE EYES STEADY START AFTER BOUNCE (0733 GMT)
European shares were expected to inch higher at the open on Wednesday as markets try to stabilise further, aided by a positive close on Wall Street the day before on the back of easing bank contagion fears and following data that showed U.S. inflation is cooling.
Asian equities also rose, tracking the U.S. rally, while Euro STOXX 50 and FTSE futures were both up 0.1%, pointing to a steady start for STOXX 600 when cash market trading starts. The pan-European benchmark rose 1.5% on Tuesday in its biggest one-day gain in almost 3 months.
Later in the day, the UK will take centre stage when finance minister Jeremy Hunt presents the spring budget. For a preview, read here: likely winners and losers from UK budget.
In corporate news, Zara owner Inditex posted a 27% increase in net profit in 2022 as sales exceeded pre-pandemic levels, while the world's No.2 fashion retailer H&M reported a 12% increase in December-February net sales.
Investors will also watch Europe's biggest operator of energy networks E.ON following its latest earnings release and its new investment plan. Still in Germany, speciality chemicals maker Lanxess forecast a drop in first-quarter core profit and 2023 earnings.
(Danilo Masoni)
PRIDE AND PRUDENCE EXPECTED IN UK BUDGET (0659 GMT)
The relief rally in the market will be tested when British finance minister Jeremy Hunt presents the UK spring budget as he tries to speed up the world's sixth-biggest economy, with business lobbies clamouring for sweeteners.
Hunt, who was drafted in last year after former Prime Minister Liz Truss's mini budget in September shook UK markets, is due to speak at 1230 GMT and is expected to stay away from big tax cuts or spending increases.
That may sour risk appetite for investors after the relief rally got a leg up on Wednesday from China's economic activity data that showed gradual, but uneven recovery. Rising expectations that the Fed will not go back to jumbo hikes after Tuesday's inflation data also helped lift sentiment.
The market is now pricing in a roughly 80% chance of a 25 basis point increase, compared with last week when it priced in a 70% chance of a 50 bps hike. Some in the market still hope that the Fed will stay pat on rates. Retail sales data later in the day will shed more light on the state of economy.
European stocks may struggle to sustain the rally with futures indicating the market is due for a slightly higher open.
Banking stocks clawed back some of their steep losses as traders bet (or hope) that the worst of the SVB fallout is over as the contagion fears that gripped the market eased.
In the corporate world, focus will be on Credit Suisse after the Swiss bank said it had identified "material weaknesses" in internal controls over financial reporting.
Meanwhile, Facebook-parent Meta Platforms announced it would cut 10,000 jobs this year, making it the first Big Tech company to announce a second round of mass layoffs.
Key developments that could influence markets on Wednesday:
Economic events: Inflation data for Sweden and France
Eurozone industrial production data; UK budget
(Ankur Banerjee)
HSBC Holdings (HSBA)