Why Shares Of Credit Suisse Are Down By 11% Today?

Credit Suisse Video 29.03.21.

Default Of Archegos Capital Will Lead To “Highly Significant” Losses For Credit Suisse

Credit Suisse stock found itself under strong pressure after the company stated that the default of the hedge fund Archegos Capital could lead to “highly significant” losses.

Separately, Nomura, which also provided too much leverage to the fund, warned investors that it could face a $2 billion loss.

According to recent reports, losses suffered by Credit Suisse may be between $1 billion and $4 billion. Credit Suisse did not comment on the potential size of its losses.

Judging by today’s price action in shares of Discovery and Viacom, which suffered from the problems of Archegos Capital, some players have not yet liquidated their positions as the stocks remained under strong pressure after their market capitalization was cut in half in just several trading sessions.

Not surprisingly, the market is worried about the negative impact on Credit Suisse, but its stock has managed to get away from lows seen at the beginning of the trading session.

What’s Next For Credit Suisse?

The market will try to evaluate the size of  potential losses from Archegos Capital default in the upcoming trading sessions. Traders will keep a close eye on the trading dynamics of the stocks involved in the drama like Discovery and Viacom.

The continuation of the current downside trend in these stocks will signal that forced selling is not over, which will be bearish for Credit Suisse shares. However, if these stocks manage to gain upside momentum, traders may decide that the worst is over, which will be bullish for Credit Suisse stock.

Archegos-related losses will be a one-time event for Credit Suisse, so the market may focus on the company’s fundamentals once it knows the actual size of these losses. In the near term, uncertainty about the impact of Archegos Capital default will remain a bearish catalyst for Credit Suisse shares.

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