Stocks plunge despite Credit Suisse buyout, central banks' pledge

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Equities sank Monday on fears about the financial sector, despite news of UBS's takeover of embattled Credit Suisse and central bank pledges to provide liquidity to troubled lenders.

The losses came ahead of the Federal Reserve's latest policy meeting this week, with speculation mounting that it will pause its interest rate hikes to provide some stability to markets.Hong Kong plummeted 2.7 percent, with heavyweight HSBC off nearly six percent on worries about its exposure to risky bonds related to Credit Suisse. Standard Chartered also sank.

The Japanese government said the country's"financial organisations on the whole have ample liquidity and capital, and the financial market is stable overall". It led US authorities last week to promise support for other lenders and depositors, while Wall Street titans including JP Morgan, Bank of America and Citigroup pledged to inject $30 billion into under-pressure lender First Republic Bank.

"Investors are likely keeping a look over their shoulder for the next disaster in a high-interest rate environment, so at best we might see markets recover some of last week's losses," said Matt Simpson at City Index.They were already in a downbeat mood before the latest crisis erupted as they contemplated more rate hikes to rein in stubbornly high inflation.

 

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