Brazilian markets rally despite Credit Suisse jitters

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Fears of an international banking crisis gained momentum on Wednesday, sparked by the crisis affecting Swiss bank Credit Suisse. After its largest shareholder, Saudi National Bank, ruled out injecting more money into the scandal-plagued bank, its shares plummeted 24 percent, sending shockwaves through markets around the world.

Global pessimism, triggered last week by the collapse of Silicon Valley Bank, one of the top 20 U.S. banks, has made Brazil’s Ibovespa stock index unstable. 

Credit Suisse had USD 580 billion in assets at the end of 2022, more than twice the size of Silicon Valley Bank. It suffered a net loss of nearly USD 8 billion last year, the bank’s worst result since the 2008 financial crisis. According to analysts, the bad mood in the market today means that the bank needs to be bailed out.

The index was down 2 percent at midday, but regained its losses in the afternoon. By 4 pm, it was hovering around opening bell levels.

Gustavo Cruz, a strategist at RB Investimentos, told the financial website InfoMoney that investors are “receiving well” news that Vice President Geraldo Alckmin — considered a center-right guarantor within the Lula administration — welcomed Finance Minister Fernando Haddad’s proposals for a new fiscal anchor. Mr. Haddad told reporters that the proposal is already with President Luiz Inácio Lula da Silva.

The results would be better were it not for the two biggest companies in Brazil’s stock market, Petrobras and Vale. Their share prices are tumbling as commodity prices falter on international markets. 

The Brazilian currency, meanwhile, is losing over 1 percent against the U.S. dollar.

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