[ad_1]
WASHINGTON – Shockwaves from the collapse of Silicon Valley Bank (SVB) pounded global bank stocks further on Tuesday as assurances from US President Joe Biden and other policymakers did little to calm markets and caused a rethink on outlook for interest rates.
Mr Biden’s efforts to reassure markets and depositors came after emergency US measures to shore up banks by giving them access to additional funding failed to dispel investor worries about potential contagion to other lenders worldwide.
Banking stocks in Asia extended declines, with big Australian banks ANZ, Westpac and NAB all down more than 2 per cent and Japan’s banking subindex falling 6.7 per cent in early trade to its lowest since December.
Singapore’s trio of local banks all retreated for a second day, though the declines were more modest. At 9.32am, DBS had dropped 0.75 per cent to $31.95, while OCBC slipped 0.2 per cent to $11.95 and UOB fell 0.4 per cent to $27.92.
The Straits Times Index meanwhile was down 1 per cent, after sliding 1.4 per cent on Monday.
The Monetary Authority of Singapore (MAS) said on Monday that the local banking system remains “sound and resilient”, while the local banks said they had no exposure to SVD and two other US banks that failed. MAS also said that feedback it has received so far indicates limited impact on Singapore start-ups, including those with operations in the United States.
Meanwhile, a furious race to reprice interest rate expectations has sent waves through markets as investors bet the Federal Reserve will be reluctant to hike next week.
“Even if the collapse of several mid-tier banks doesn’t develop into a full-blown systemic crisis, it will more than likely trigger a credit crunch,” said Paul Ashworth, Chief North America Economist at Capital Economics.
Traders currently see a 50 per cent chance of no rate hike at that meeting, with rate cuts priced in for the second half of the year. Early last week, a 25 basis-point hike was fully priced in, with a 70 per cent chance seen of 50 basis points.
With investors fearing additional failures, major US banks lost around US$90 billion (S$121 billion) in stock market value on Monday, bringing their loss over the past three trading sessions to nearly US$190 billion.
Regional US banks were hit the hardest. Shares of First Republic Bank tumbled more than 60 per cent as news of fresh financing failed to reassure investors, and so did Western Alliance Bancorp and PacWest Bancorp.
Europe’s Stoxx banking index closed 5.7 per cent lower. Germany’s Commerzbank fell 12.7 per cent and Credit Suisse slid 9.6 per cent to a record low.
Mr Biden said his administration’s actions meant “Americans can have confidence that the banking system is safe,” while also promising stiffer regulation after the biggest US bank failure since the 2008 financial crisis.
“Your deposits will be there when you need them,” he said.
[ad_2]
Source link