A tumultuous week in US financial markets ended on an uncertain note Friday after a massive injection of $30 billion of deposits from big banks into First Republic Bank failed to calm investors.
Last week, the sudden collapse of three US banks: Silvergate Capital, Signature Bank
and Silicon Valley Bank, began to reignite concerns about a weak banking sector amid sharply higher interest rates.
SVB Financial Group
on Friday it filed for Chapter 11 bankruptcy and said it will seek a court-supervised reorganization. Silicon Valley Bank has been placed in federal receivership following a run on its deposits.
Within days, other regional banks and financial firms have been swept up in liquidation.
Bank of the First Republic
another midsize California bank, saw its share price hit an intraday record low this week, before the bank was promised a $30 billion deposit pledge from a group of the country’s largest banks, including JPMorgan Chase
Bank of America
In Europe, shares of Swiss banking giant Credit Suisse
it plunged to around $2 a share in New York trading. The bank said on Thursday it intended to borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank to increase its liquidity. The bank’s shares in New York were down 33.9% in the year to Friday.
Here’s a look at the big swings in financial markets over the past week or so.
SPDR S&P Regional Banking ETF Stocks
which covers the regional banks segment of the broader S&P 500 index, plunged 24.5% in the last seven trading days since March 9, a day after SVB announced it sold a portfolio of securities at a loss of more than 1 billion dollars. Depositors began to flee and regulators closed the bank on March 10.
The Treasury, FDIC and Federal Reserve announced guarantees for all deposits at Silicon Valley Bank and Signature Bank on Sunday to bolster confidence in the banking industry.
Shares of the SPDR S&P Regional Banking ETF fell 6% on Friday. First Republic Bank shares fell 32.8% after a $30 billion deposit influx failed to calm nervous investors.
A sell-off in bank shares sent the broader stock market tumbling, leaving the S&P 500 index
down 2.1% since March 9, and briefly wiping out the benchmark large-cap index’s early 2023 gains.
The S&P 500 finished 1.1% lower on Friday but gained 1.4% for the week, according to Dow Jones Market Data. It was up 2% on the year through Friday.
The Nasdaq Composite Index
It outperformed the Dow Jones Industrial Average by 4.45 percentage points this week, its highest weekly performance since March 20, 2020, according to Dow Jones Market Data.
The jump in the biggest technology and semiconductor names helped limit losses in the Nasdaq 100 Index, which tracks the top 100 technology companies on the Nasdaq Stock Exchange.
The Nasdaq Composite Index
ended lower on Friday but posted a 4.4% weekly gain, while the Dow Jones Industrial Average
it was down 0.2% for the week.
See: Microsoft, Apple and Meta outperform as investors seek safety in mega-cap tech stocks
The bond market also had a week of extremes. The yield on the 2-year Treasury note
it fell 74 basis points, the biggest weekly drop since October 1987, a period marked by the Black Monday stock market crash, according to Dow Jones Market Data.
See: Why bond market volatility is at its highest since the 2008 financial crisis amid fallout from banks
In addition to its ups and downs, the CPI report for February showed little progress in cooling high inflation, which had not abated before the weekend. The policy-sensitive 2-year Treasury yield fell 28.4 basis points to 3.846% on Friday. That was the lowest level since September 14, 2022.
Trading in the Fed futures market has also been choppy, with odds on Friday showing a 40% chance the Fed will not raise rates at its meeting next week and a 60% chance the Fed will not raise rates at its meeting next week. policymakers to raise rates by another 25 basis points to a range of 4.75%-5%, according to the CME FedWatch tool.
Gold prices rose 8.1% in the past seven trading days, ending Friday at their highest levels in 11 months and posting their best weekly gain in nearly three years, according to Dow Jones Market Data. Fears of potential further stress in the banking sector weighed on investor sentiment, reinforcing the yellow metal’s safe-haven appeal.
Gold futures for April delivery
It gained $50.50, or 2.6%, to settle at $1,973.50 an ounce on Comex on Friday, with the most active contract rising 5.7% for the week. That was the highest close for the yellow metal since April 18, 2022 and its biggest weekly advance since April 2020, according to Dow Jones Market Data.
The ICE US Dollar Index
a gauge of the dollar’s strength against a basket of rivals, has fallen 1.5% since last Thursday. The dollar also closely follows the movements of the 2-year yield.
The dollar index rebounded on Wednesday morning as liquidity concerns at Credit Suisse revived concerns about risks in the global banking system, prompting safe-haven dollar buying.
Oil futures tumbled with the most active US contract ending at the lowest level in 15 months and posting its biggest weekly drop in nine months, according to Dow Jones Market Data.
US benchmark West Texas Intermediate crude for April delivery
it fell $1.61, or 2.4%, to settle at $66.74 a barrel on the New York Mercantile Exchange, leaving the contract down 13% for the week, according to Dow Jones Market Data.
The contract has declined 14.2% over the past seven trading sessions, according to Dow Jones Market Data.
The Bitcoin price took a hit last Wednesday when Silvergate Capital Corp.
He said his cryptocurrency-friendly Silvergate Bank would shut down and liquidate, with the goal of returning all deposits.
However, following the failures of SVB and Signature Bank, bitcoin rallied more than 20% in the last nine sessions, to trade at $26,750.50 on Friday, according to CoinDesk data.
The financial establishment has long viewed Bitcoin with skepticism, but its supporters have argued that it represents an alternative to the traditional banking system.
See: What happened to Silvergate Capital? And why does it matter?