Stocks slide as Credit Suisse rescue fails to stem rout

Banks led stock markets lower on Monday and safe havens such as bonds rallied as a weekend deal to rescue Credit Suisse and promises of liquidity from central banks could not stem fears that a bigger crisis is brewing in the financial system.

Asia gains for S&P 500 futures and European futures reversed as the sun rose in London. S&P 500 futures were last down 1%. European futures dropped 1.2% and FTSE futures fell 1.5%, and investors rushed to price in interest rate cuts.

In Hong Kong, HSBC stock dropped 7% in its worst session for six months. Standard Chartered shares fell nearly 8% and turnover was high. Tokyo banks (.IBNKS.T) dropped 1.9% and bank stocks led a 1.6% drop for MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS).

Over the weekend, UBS said it would buy Credit Suisse for 3 billion francs ($3.2 billion). The Federal Reserve, European Central Bank and Bank of Japan pledged to make it even easier to buy dollars, upping the frequency of supply operations.

But with some Credit Suisse bondholders in line to be left with nothing, and nerves running high after a week where concerns mushroomed that regional US lenders to large systemic bank in the heart of Europe, investors do not feel like taking risks.

"This time last week, when we were talking about SVB and Signature, it was very different in that we were talking about just the depositors and not the quality of the assets," said Steven Major, global head of fixed income research at HSBC.

"This week we've moved over to Europe and we're looking at assets ... anyone who said last week you can't compare sub-prime mortgages and sub-prime bonds with this crisis - well, actually it's moved on," Major added.

Reuters