Wall Street continued to fall, and the market will go through a long-term banking crisis shockwave
Fears of a banking crisis sent a shockwave through the market, and Wall Street is headed to end this week’s session with its worst weekly performance of the year. Two major banking events are driving the stock markets and affecting investors’ market outlook.
That includes the decline in the shares of the Swiss bank and the collapse of the U.S. lender, the Silicon Valley bank.
On March 15, the shares of Suisse Bank declined by 24%; on the same day, both the investment fund Archegos and Greensill Capital Bank collapsed. As for the first Republic Bank, its shares were down by more than 20% after getting caught in the action of selling billions of its banking stocks. On top of that companies and asset holders also have been caught withdrawing the value and cash of their bonds as a result of bankruptcy fears.
These fears raised an important question regarding the banking sector: will there be a liquidity crisis and what potential problems might occur?
Plus, the recent banking failure just reduced the U.S. growth indicators for this year, at least for the first half.
Wall Street and global stocks were among the top losers of recent bank failures. In today’s session, all major indexes were posted.
In today’s stock market news, the S&P 500 benchmark fell by 1,22%, the Nasdaq indexes declined by 1,1%, and the Dow Jones industrial average plummeted by 1,31%. The U.S. stock market’s volatile indicator skyrocketed by 9%.
The spread of the shockwave through the market might reinforce the U.S. Federal Reserve’s decision to rethink its policy of raising interest rates. Especially when the bond market is also losing its market value.
As of 10:40 ET, the U.S. 10-year Treasury yield fell sharply by 4,73% to 3,414; the 30-year benchmark declined by 2,79%. The 5-year bond yield posted the largest decline of today’s session, estimated at 6.16 percent.
Elsewhere, the European central banks announced that they will stock their interest rate hike policy. The European banks will raise their key interest rates by 50 basis points despite the fresh banking crisis.
In the UK, reports say that British spending power posted the largest decline in the past 70 years. The U.K. is one of the top countries in Europe in terms of higher inflation pressure and low spring power.
Gold prices continued their rising trend; gold enjoyed a 2,04% increase on Friday’s session to a market price of $1963. Yet, we can’t say the same about oil prices. The oil sector is going through its worst weekly gains since the Silicon Valley collapse.
The U.S. West Texas Intermediate index declined by 3.04 percent to $66 per barrel, while Brent oil fell by 3% to $72 per barrel.
In the end, it’s only appropriate that the easy money era is coming to an end. There are certain wins or investment opportunities. The failure of the banking system will force investors to turn their focus to early-stage companies or speculative investments when the volatile risk is high.