The ASX 200 Index (ASX: XJO) is down 1.38% today on worries over the UBS rescue of Credit Suisse. Given the leading components of that index this should come as little surprise. Dependent upon events as markets trade around the world Monday this could recover or, of course, get worse.
Of course, all the claims are that the Australian banks are entirely well funded, have more than sufficient capital and there's liquidity galore to stopgap them too. But then that was also true of Credit Suisse last week until it wasn't. So a certain worry is understandable. But there's more to it than just concerns - however weak - about the banking system.
The other set of companies dominating the ASX isthe global mining giants. Which means that the ASX is sensitive to global economic conditions in a manner that many other national market indices are not. If the current banking troubles spill over into the real economy then commodity prices are going to fall. That is just what happens at even the hint of recessionary times.
ASX 200 Index ASXThus the ASX 200 takes a double hit at such a time. There's the worry over banks - even if just liquidity, not solvency - and also how those mining giants would deal with even that hint of a global recession.
Of course, there's no actual worry over Fortescue, BHP and the rest. Their financial positions are near impregnable after the past couple of years of soaring mineral prices. Rather, any drawback in prices would simply reduce their current very wide margins. So it's a reduction in vast profits to be worried about, not solvency itself of the miners.
We can also look at a percent and a bit as a rather mild reaction to the weekend's events. But the big question is whether the reaction is going to remain mild. That's why keeping an eye on the other global markets as they open through the time zones is going to be important. How Europe and the US react to Credit Suisse and UBS will be the dominant effect on tomorrow's ASX action.