© Reuters.
Investing.com – It appears that the crisis in the US financial system will not stop there, as new US banks suffered a record drop in their shares in pre-market trading today.
Shares fell First Republic Bank (NYSE:) the US rose by 60% in pre-market trading, after the US bank tried to calm concerns about its liquidity after the collapse of the “Silicon Valley” bank.
The bank said late Sunday that it had more than $70 billion in unused cash to fund its operations under agreements with the US Federal Reserve and JPMorgan.
However, traders quickly sold the bank’s shares after this announcement, as US banks are under heavy pressure over the past few days due to the crisis in the banking sector.
A bank is presented PacWest Bancorp (NASDAQ:) for a record drop of 44% in pre-opening trading, also affected by the collapse of the “Silicon Valley Bank”.
JPMorgan lost nearly 2%, Bank of America (NYSE:) fell 6.6%, and Goldman Sachs (NYSE:) lost about 2% of its value.
Before the most important Fed meeting, how will gold, the dollar and treasury bonds interact in light of the flow of data.. What is the golden opportunity before this?
The trusted analyst, Ghaith Abu Hilal, provides you with technical analysis of market drivers, a simplified explanation of all events, and readings on inflation data and the Fed’s reaction.
The symposium will take place tomorrow night after the inflation data is released, and all you have to do is register to attend for free from here: http://bit.ly/3T3KL9f
New collapse
An overnight action by US regulators to stabilize the financial system was set to boost US stocks on Monday, but turmoil continued to engulf US banks, with First Republic Bank shares plunging more than 60% in early trading on Monday. PacWest Bancorp lost more than 35%, while Columbia Banking System Inc stock fell 5%.
First Republic Bank said on Sunday that it would get additional funding from the Federal Reserve and JPMorgan after the regional bank’s share price fell sharply affected by the collapse of the Silicon Valley bank.
The bank reported that it had more than 80 branches across the United States, and that it held $176.4 billion in deposits at the end of 2022, of which 68%, or $119.5 billion, was uninsured.
The bank also told customers that its liquidity positions remained “very strong”, in order to reassure them that their deposits were safe.
The faltering stocks highlighted that even after emergency action by US regulators, the banking sector remained unstable, as investors were nervous that more crashes were still on the cards as contagion spreads.
“The market is likely to remain very cautious despite regulators’ intervention,” said Maria Vietmani, senior multi-asset analyst at State Street Global Markets.
She added, “This is a difficult situation for the Fed, on the one hand it needs to continue on its way to stop inflation, but it also needs to protect the financial system. It looks like a lose-lose situation for the Fed and the market.”
Read also
European stocks
In Britain, banking stocks across the FTSE 100 and FTSE 250 fell around 4% despite HSBC’s acquisition of the British arm of SVB Bank for £1.
The FTSE 100 fell 2.3 percent and the FTSE 250 fell 2.9 percent.
Shares in HSBC fell as much as 3.7% despite the acquisition announcement, with Lloyds down 4.8%, Barclays (LON:) down 4.9%, and Natwest down 4.2%.
The European index fell 0.6 percent, after closing at its lowest level in more than five weeks on Friday.
European banking stocks fell 1.1%, after witnessing the worst selling in more than five months over two days, amid concerns about the resilience of the sector’s balance sheet in the face of the collapse of Silicon Valley, in addition to expectations of raising interest rates.
US futures
Index futures rose 0.5% to 12,029 points.
Dow Jones futures fell 0.2% to 32,094 points.
S&P 500 futures fell 0.1% to 3,898 points.
