JSE plunges on banking sell-off

The JSE tracked the global equities slump on Wednesday as the sell-off after the collapse of Silicon Valley Bank regained momentum from fresh turmoil at Credit Suisse.

Mounting troubles at the Swiss lender added to jitters after its biggest shareholder, Saudi National Bank, said it would not inject more money into the bank, which is already battling to recover from a string of scandals that have undermined client and investor confidence.

Credit Suisse shares lost as much as 30% of their value on the day, hitting an all-time low.

Bloomberg reported that Credit Suisse had added to deep concern about the health of financial institutions after the collapse of Silicon Valley Bank and Signature Bank in the US in recent days. And with concerns about the possibility of more hidden trouble in the banking system, investors have been quick to sell bank stocks on bad news, it added.

The turmoil prompted an automatic pause in trading of Credit Suisse shares on the Swiss market and sent shares of other European banks plunging.

“In recent days, a crisis in the financial sector has centred around regional banks as Silicon Valley Bank and Signature Bank collapsed, both casualties of poor management in the face of eight interest rate hikes by the Federal Reserve in the last 12 months,” said FXTM senior research analyst Lukman Otunuga.

“But now the crisis has spilt over to the European region ... the emerging turmoil at Credit Suisse comes at a time when the economy grapples with stickier, if declining, inflation,” Otunuga added. “It has sparked debate among traders betting on whether the Fed will hike interest rates after its meeting next week.”

The JSE all share fell 2.82% to 72,895.54 points and the top 40 slumped 2.97%. With the exception of precious metals, all the main indices were down more than 2% on the day.

At 7.30pm, the Dow Jones industrial average had fallen 1.66% to 31,621.70 points, while the S&P 500 was down 1.45%. European markets were down more than 3%.

At 6.43pm, the rand had weakened 1.62% to R18.416/$ and by 0.62% to R22.1326/£, while it had strengthened 0.19% to R19.401/€. The euro was 1.78% weaker at $1.0539.

Gold gained 1.71% to $1,934.33/oz, but platinum fell 2.59% to $963.83/oz. Brent crude slumped 6.41% to $72.57 a barrel.