Yahoo Finance What to watch: Credit Suisse coronavirus warning, stark data, stocks fall
Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
Credit Suisse warns of coronavirus uncertainty
Credit Suisse has set aside over 1bn Swiss francs (£830m, $1bn) to cover expected losses caused by the coronavirus pandemic.
The Swiss lender said on Thursday it had set aside an additional CHF 585m to cover potential credit losses linked to the pandemic.
Provisions for loan losses were just CHF 81m in the first quarter of 2019.
The bank also set aside CHF 284m to cover unrealised losses in leveraged lending and a further CHF 160m to cover unrealised losses on financing activity in Asia.
“I think it’s an appropriate response to what is obviously a very extreme macroeconomic outlook,” chief financial officer David Mathers told journalists.
“We are dealing with probably the most severe macroeconomic crisis that the world has seen since the 1920s.”
Chief executive Thomas Gottstein said the ultimate impact of COVID-19 was “difficult to asses” and warned Credit Suisse may have to build further reserves to absorb losses in future.
Gottstein also said losses could rise at the bank’s asset management division.
However, Gottstein said the bank was in a “robust capital and liquidity” position and enjoyed “a number of key advantages” going into the crisis, such as a strong private banking division and historically lower risk exposure in its markets business.
The additional provisions to cover losses came as Credit Suisse reported better-than-expected first quarter earnings. Net income rose 75% to CHF 1.3bn and net revenue rose 7% to CHF 5.8bn.
UK economy suffers record shock and 'unprecedented' job losses
UK firms have suffered their worst month of trading and job losses in decades as the coronavirus crisis has wreaked havoc in the economy, new figures show.
Activity in services and manufacturing plunged at its steepest rate and to the lowest levels on record in a closely watched business survey published on Thursday.
The latest figures show Britain’s dominant services sector, from banking to retail and hospitality to the creative industries, has been hit hardest with many firms forced to shut down. 81% of services firms said business had declined. Manufacturing has also seen activity plummet.
Data provider IHS Markit and the Chartered Institute of Procurement & Supply (CIPS) released the latest flash figures from their monthly UK purchasing managers’ index (PMI) survey.
The headline index figure for manufacturing and services combined sank to 12.9 in April, down from an already record-breaking low of 36 in April.
Euro slips as data points to historic crash in eurozone economy
The euro was under pressure on Thursday morning as closely watched private sector surveys suggested a historic contraction in the eurozone economy due to COVID-19.
IHS Markit’s flash eurozone purchasing managers’ index (PMI) for April came in at 13.5, which was worse than economists had expected and the lowest reading since the survey began in 1998. The survey measures expectations of business activity within the private sector.
“April saw unprecedented damage to the eurozone economy amid virus lockdown measures coupled with slumping global demand and shortages of both staff and inputs,” said Chris Williamson, chief business economist at IHS Markit.
“The extent to which the PMI survey has shown business to have collapsed across the eurozone greatly exceeds anything ever seen before in over 20 years of data collection.”
Oil rallies from multi-year lows as Trump threatens Iran
Oil futures rallied off multi-year lows on Thursday, after days of panicked selling in the market.
International Brent crude futures (BZ=F) rose by 7.3% on Thursday morning to $21.87 a barrel. US West Texas Intermediate crude futures (CL=F) were up 9.8% to $15.13.
Analysts said the price revival was driven by a tweet from US President Trump saying he had “instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.”
Iran sits on the Strait of Hormuz, which is one of the most important sea passages for international oil trade. Flaring tensions in the region could put pressure on supply, which would support higher prices.
“The catalyst [for oil] seemed to be a tweet from President Trump,” Deutsche Bank strategist Jim Reid and team wrote in a note to clients on Thursday morning.
European stocks fall as investors assess stark impact of crisis
European stocks fell on Thursday as investors examined emerging economic data and a raft of corporate earnings that underlined the scale of the coronavirus crisis.
The pan-European STOXX 600 index (^STOXX) dipped into the red, while London’s FTSE 100 (^FTSE) was down by around 0.1%.
Germany’s DAX (^GDAXI) was down by around 0.4%, while France’s CAC 40 (^FCHI) gained around 0.2%.
“Markets here in Europe initially got off to a modestly positive start, however the really poor PMI numbers have taken some of the air out of the early positivity, with the early gains slipping away,” said Michael Hewson, the chief market analyst at CMC Markets UK.
What to expect in the US
Futures were also pointing to a steady open for US stocks on Thursday.
S&P 500 futures (ES=F), Dow Jones Industrial Average futures (YM=F), and Nasdaq futures (NQ=F) were all on the level.
