US stock market Combined Closing Monday, March 27, 2023, after First Citizens Bank completes the acquisition of Silicon Valley Bank (SVB), covering all deposits and loans. SVB valued at $16.5 billion which is down from its original value of $72 billion. Silicon Valley Bank Asset Purchase Agreement Gives Investor Confidence in the Banking Sector Nasdaq was dragged by technology stocks.
The Dow rose 194.55 points (0.60%) to close at 32,432.08 points.
– S&P increased 6.54 points (0.16%) to close at 3,977.53 points.
The Nasdaq fell 55.12 points (0.47%) to close at 11,768.84.
First Citizens Bank shares rose after the Federal Deposit Insurance Corporation (FDIC) said First Citizen’s chief executive Frank Holding Jr. This transaction with the FDIC is a pivotal move to build confidence in the U.S. financial system, with First Citizen having about $109 billion in assets. and has about $89.4 billion in deposits
Silicon Valley Bank closed in early March 2023. It was the largest bank to collapse since the 2008 financial crisis. The U.S. government shut down SVB on March 10, 2023, and assigned the FDIC to take over control and custody of SVB after SVB. Severe liquidity problems as customers, mostly startups in the technology industry, flocked to withdraw their money from the bank.
Most analysts see the US Federal Reserve raising interest rates sharply and repeatedly in a row as the culprit. Because rising interest rates will increase the cost of borrowing for businesses. rising Especially startups and technology companies that are SVB’s major customers.
When the cost of borrowing increases Causing these businesses to flock to withdraw deposits for business use As a result, SVB had to increase its capital by selling government bonds it held. But bond prices fell against the rising interest rates following Fed policy. As a result, SVB was forced to sell bonds at a lower price than their face value. which ultimately resulted in loss and bankruptcy
Eased Concerns About the Banking Crisis pushing investors to ignore low-risk assets, dragging gold prices down on Monday (27 March 2023)
– Comex gold price Delivery in April, 2023, down $ 30.00, closing at $ 1,953.80 per ounce.
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