Stock futures were mixed on Thursday morning as US investors turned their attention to developments in Europe ahead of a major announcement from the European Central Bank following Wednesday’s turmoil at Credit Suisse and a late-night intervention by the Swiss National Bank.
As of the 8:45 a.m. close, Dow futures were off about 0.3%, S&P 500 futures were down 0.2%, while Nasdaq futures were flat.
The ECB is set to announce its latest policy decision at 9:15 am ET, followed by a press conference half an hour later with ECB President Christine Lagarde.
Investors expect the ECB to raise interest rates to 0.25%, but this week’s turmoil in the banking system – which found its way to Europe’s shores on Wednesday in the form of Credit Suisse’s crisis – has pushed inflation higher. has challenged planned central bank actions to reduce Rate of interest.
“FOMC members have not yet decided what to do next week given the volatility of the markets,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note Thursday. “But yesterday’s slump in Credit Suisse stock, and more importantly – the loss of liquidity in the Treasury market coming on top of the SVB, Silvergate and Signature failures, makes it more likely that they pass on raising rates.
“It is more important, in our view, not to take risks with the stability of the system than to reaffirm our determination to fight inflation,” Shepherdson said.
Late Wednesday, Credit Suisse announced it would borrow 50 billion Swiss francs, or about $54 billion, from the SNB.
Shares of Credit Suisse plunged as much as 30% on Wednesday after the Saudi National Bank’s largest investor said it would not raise its stake in the troubled bank, citing regulatory challenges to take its stake north of 10%.
Shares of Credit Suisse in New York were up about 5% in pre-market trade on Thursday.
In US economic data, the latest Weekly Report on Initial Jobless Claims The decline in first-time filings for unemployment insurance fell to 192,000 from 212,000 the previous week and suggested continued strength in the US labor market.
The report serves as one of the last pieces of notable economic data ahead of the Federal Reserve’s two-day policy meeting, which begins next Tuesday and the central bank will announce its latest policy decision on Wednesday afternoon.
the markets are now odds around 75% The Fed on raising rates to 0.25% at its policy meeting next week, well below expectations for a 50 basis point rate hike ahead of last week’s banking system turmoil.
Investors will also pay close attention to testimony from Treasury Secretary Janet Yellen, who will speak before the Senate beginning at 10:00 AM ET. In prepared remarks released ahead of Yellen’s appearance, the Treasury Secretary said the US banking system remained “robust”.
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