European futures are flashing red, in the aftermath of an unprecedented weekend that saw the historic state-backed rescue of Credit Suisse by UBS and a coordinated central bank effort to bolster the flow of cash around the world.
Eurostoxx 50 futures are down 1.3% – having earlier fallen as much as 2% – while FTSE 100 futures contracts are down 1.2% and German DAX futures are 1.2% lower.
Credit Suisse shares fell 61.95% in Julius Baer pre-market trading.
There was relief after the 3 billion Swiss francs (USD 3.23 billion) deal orchestrated by Swiss regulators on Sunday, but market focus has quickly shifted to the massive hit some Credit Suisse bondholders would take under the UBS acquisition.
“We think it is the fact that shareholders have essentially been bypassed in the UBS/CS merger and the fact that AT1 has been bailed in is weighing on markets,” wrote RBC Capital Markets strategists in an early note on Monday.
Barclays announced a downgrade to European banks from positive to neutral saying “recent events again go to show how fragile the banking system can be, even though regulation has increased several fold since the Global Financial Crisis.”