Stock market rallies amid news that the First Citizen bank will buy the silicon valley bank
The banking sector is finally getting some relief and eased worries from recent banking stress. Both U.S. and European stock markets opened higher. The jump in the stock market was boosted by the news that the U.S. lender First Citizens bank might buy the Silicon valley bank.
Several reports say that the First Citizen Bank is moving to buy a big share of the crashed silicon valley bank. The news, on the other hand, boosted the bank shares. On Monday morning, the first citizen bank shares jumpers by more than 46%.
What makes the news even more positive, is the announcement of late Sunday by the Federal Deposit Insurance Corporation. The FDIC officials announced that the First Citizens Bank will buy silicon valley deposits and loans. They added that the First Citizens banks will benefit from a $16.5 discount from silicon valley loans and
U.S. stocks were mostly mixed during the past two weeks, most indexes took significant losses due to the increased tension and worries of further tighter credit conditions.
Traders fear that the banking system might fail and the credit condition will get even tighter. Tighter credit conditions will lead to a reduction in lending by banks. This will make it harder for businesses and individuals to obtain loans, which can impact economic growth.
Yet, only two of Wall Street’s main indexes posted higher gains in Monday’s Trading session. The S&P 500 benchmark rose by 0,25% to a total of 3,981.5 basis points. The Dow futures indexes jumped by 0,56% totaling total basis points of 32,416.8.
As for the tech sector, the Silicon valley failure weakened the technology sector, and Nasdaq futures fell by 0,26%.
The dollar index remains weakened by the banking system failure worries, and the U.S dollar index fell by 0,15.
Oil prices jumped in Today’s trading session, the West Texas Intermediate rose by 2,86% to a barrel price of $71,15. Bernt oil jumped by 2,31% to a market price of $76,31 per barrel. As for natural gas prices, gas prices are currently down by 6,4% to $2.2 per gallon.
Elsewhere, the European stock market also delivered positive data. The Stoxx Europe 600 banks were up by 1,1%, the Dutch bank jumped by 6%, and the London FTSE bank ticked by 0.5%.
Even so, indicators of how bearish or bullish shows that investors are becoming more positive about the banking sector. Rising interest rates and decreasing consumer spring confidence put a heavy white on the U.S. economy. Financial institutions become more cautious in lending money, either by raising interest rates or imposing stricter lending criteria.
In terms of future outlook, the banking system needs to fix the current errores, otherwise, the price will be heavy, analysis says.
Meanwhile, investors will turn their interest to this week’s consumer spending confidence resorts and weekly inflation data.