© Reuters.
Investing.com – US stock markets started trading today, Friday, with sharp losses, a few moments after the release of US employment data that ignited the markets during the past minutes, and the impact of the severe crisis in banks after the collapse of the “Silicon Valley” bank SVB Financial Gro (NASDAQ:)”.
And on the impact of the employment data, which contradicted expectations, which was issued a short while ago, the dollar index consolidated its strong decline, which contributed to the violent rise of gold.
However, the market turmoil did not stop there, as nervous investors wiped $52.4 billion from the market capitalization of the four largest banks in the United States (by assets), amid concerns about the value of the lenders’ bond portfolios. Bank shares fell on the global stock exchanges today, and the matter did not stop at the American Stock Exchange only.
On Thursday, the KBW Bank index in the United States witnessed its worst day since June 2020, as its members gave up more than $90 billion in value. In Europe, today, Friday, the largest banks lost more than $ 40 billion of their market 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?
Register your attendance now through the link: http://bit.ly/3T3KL9f
Employment data
Employment data was issued just above experts’ expectations, but it came lower than the previous month’s figures, which motivates the Federal Reserve to ease the pace of tightening, as Al-Faisal is now scheduled to be released next week.
On the other hand, the unemployment data came to reflect what the Fed wants, which wants to see greater unemployment to achieve a soft recession and control inflation, as it rose more than experts’ expectations and greater than the rate recorded in January.
For the month of February, while experts expected an addition of 205 thousand only, while a decrease in the reading recorded in January from 517 thousand to 504 thousand.
With 265 thousand jobs, and expectations were to add only 210 thousand, but it is less than the previous reading, which recorded 386 thousand.
On the other hand, it rose by 3.6%, while experts expected the rate to remain as it was in January at 3.4%.
It rose by 0.2%, less than the forecast of experts who expected a rise of 0.3%, the same rate recorded in January. As for Ali, it rose by 4.6%, while experts expected it to rise by only 4.7%. However, the January reading was 4.4%.
Read also
American banking crisis
Shares of one of the largest American banks suffered a record decline during trading yesterday, Thursday, as more than 60% of the market value of “Silicon Valley Bank – SVB Financial Gro (NASDAQ:)” evaporated, due to concerns about the bank’s liquidity, especially after the sharp losses that it suffered. The bank because of the bond sales that were affected by the Federal Reserve’s policies, to stop trading on the bank’s shares during these moments of today’s trading.
This comes after the bank said it had sold “all” of its available-for-sale securities and was looking to raise $2.25 billion between common shares and convertible preferred shares, but the company has just reported that attempts to raise these funds have failed and is now in talks to sell itself.
The news was enough to send shockwaves through the entire US banking sector, which fell by more than 0.7% – the worst indicator – affected by the collapse in the shares of the “Silicon Valley” bank.
In the past few moments, some sources reported that the bank’s clients tried to withdraw millions of dollars from their accounts, but were unable. Where online banking and mobile phone services appear to be unavailable to some customers.
Also read:
The causes of the crisis .. is not the only bank
The bank had to liquidate a large portion of its securities portfolio to meet the demand for cash, and because bond prices have fallen sharply as a result of the Federal Reserve’s rate hikes over the past year, the bank expected a loss of about $1.8 billion. Hence the need for $2.25 billion in new capital.
Wells Fargo analyst Mike Mayo said in a note to clients that SVB’s problems appear to be caused by a “lack of funding diversification,” and that rising interest rates, fears of a recession, and a tepid market for initial public offerings (IPOs) have made it difficult for startups to raise additional capital. .
The rapid decline in (SVB) shares comes shortly after the announcement of Bank ( Silvergate Capital Corp (NYSE:)) which focuses on digital currency announced plans to liquidate.
Next to it also displays an arrow Signature Bank (NASDAQ:), exposed to cryptocurrencies, fell to a record low, with losses now reaching 18%.
Bank stocks declined globally
On Thursday, the KBW Bank index in the United States witnessed its worst day since June 2020, as its members gave up more than $90 billion in value. In Europe, the largest banks lost more than $40 billion of their market value on Friday.
The pan-European STOXX index was on course for its worst day since June, driven down by more than 8% for Deutsche Bank (ETR:) Societe Generale, HSBC, ING Group and Commerzbank, which all fell by more than 5%. .
On the Paris Stock Exchange, the shares of “Soitier General” Bank lost 4.96% to 25.40 euros, and “BNP Paribas (EPA:)” 3.38% to 60.52 euros, and “Credit Agricole” 2 ,94% to 10,97 euros.
Deutsche Bank (ETR:) German Bank lost 9.85% of its value, while Commerzbank, Germany’s second largest bank, fell by 6.12%. British Barclays (LON:) shares declined by 3.83%, Italian Intesa Sanpaolo decreased by 3.06%, and Swiss «UPS» decreased by 4.45%.
In Hong Kong, HSBC (LON:) and Standard Chartered lost more than 3% on Friday, and Hang Seng Bank lost more than 4%. The same trend was registered in Japan, where shares of the most prominent Japanese banks declined.
Expert comments on the crisis
The American billionaire, “Bill Ackman”, advised his country’s government to consider a plan to rescue the Bank (SVB), if the latter fails to provide private capital.
In a series of tweets, he said, venture capital-backed companies use “SVB Financial” to obtain loans and cash for operation.
He added that the failure of the bank, which focuses on the technical sector, could cause a “devastating blow” to the long-term growth of the economy, indicating that the government may resort to guaranteeing deposits in return for obtaining permits that enable the bank to raise new funds.
While the economist, Mohamed El-Erian, said that US banks can avoid the risks of contagion and systemic pressures resulting from the unrest sparked by the “Silicon Valley Bank”.
“The contagion risks and systemic threat can be easily contained through careful management of balance sheets and avoiding further monetary policy mistakes,” El-Erian said in a tweet on Friday.
Pointers now
The industrial index fell 69.72 points, or 0.22 percent, to 32,185.14 points.
The Standard & Poor’s 500 index fell 25.55 points, or 0.6 percent, to 3,896.77 points.
The Nasdaq Composite Index fell 93.99 points, or 0.9 percent, to 11,240.36 points.
Gold and the dollar now
It rises 1.95% to 1867 dollars an ounce.
US gold futures rose 2% to $1,870 an ounce.
The dollar index is now declining by 1%, to record 104.23 points.
The Federalist’s great sin…and how to follow it without fear:
