Swiss stock market opens down after Wall Street chaos

The Swiss Market Index (SMI) stood at 8,771.90 points or 3.6 percent down shortly after the opening of the day’s trading on Tuesday.

Swiss stock market opens down after Wall Street chaos
A trader in New York on Monday. Photo: Bryan R. Smith / AFP

At one point the index was down as much as 4.3 percent. However, the index then began to rally to be down 2.36% to 8,886 points at 9.25am local time.

This is the first time the SMI has been below 9,000 points since September 2017, with the biggest losers early on Tuesday being banks. Credit Suisse shares were 5.2 percent lower while UBS stocks had tumbled 4.5 percent.

The falls on the Swiss index, which includes the 20 largest companies in the country, come a day after the Down Jones Industrial Average suffered its worst points fall in history, shedding 4.6 percent on Monday on the back of investor fears of rising interest rates.

The sharp downturn in the United States wiped out all market gains seen in 2018 to date while Asian markets also took a hit last night.

Monday’s chaos on Wall Street spelled an abrupt end to the buzzing mood on economic markets since Donald Trump’s arrival in Washington – a phenomenon described by the White House as the “Trump Bump”.


Norwegian shares plummet by more than half on dilution fears

Shares in Norwegian Air Shuttle plummeted 63 percent when the Oslo Stock Exchange opened on Tuesday, as investors reacted to plans announced last week to convert a massive 44.5bn kroner ($4.3bn) of debt into new shares.

Norwegian shares plummet by more than half on dilution fears
Is the sun finally about to set on Norwegian? Photo: David Charles Peacock
The fall was so sharp that the exchange was forced to place the shares under “special observation”, a measure taken only when valuations are extremely uncertain. The shares then rebounded and by Tuesday afternoon were trading at about a 30 percent down on where they ended the week last Thursday. 
Mads Johannesen, investment economy at the online share trading company Nordnet, said that the company's rescue plan threatened to severely dilute existing shareholders.  
“Existing stockholders today wouldn't be left with much if they decide to fully dilute the bonds and convert them into equity, so it doesn't look promising,” he told The Local. “I guess they're going to survive in some form, but how they're going to look coming out the other side depends on the negotiations.” 
The international brokerage Sanford C. Bernstein on Tuesday cut its target price for the company's shares to zero. 
“Norwegian is at the end of the line,” the brokerage's analyst Daniel Roeska wrote in a note to clients announcing the decision. “Rounded to the nearest Krone, existing shares are all but worthless.”
The Norwegian government last month made the overwhelming majority of the 3bn kroner in loan guarantees it offered the airline conditional it successfully swapping some of its near 80bn kroner debt pile for equity. 
Norwegian is now negotiating with banks and bondholders to convert more than half of its debt into shares, before putting the plan to existing shareholders at a meeting on May 4.