Mubasher – Mahmoud Jamal: The global stock markets, and then the regional ones, have become a real test of steadfastness in the face of the repercussions of the disclosure of three bankruptcies in the United States of America in recent days for Silicon Valley Bank, Signature Bank and Silvergate Bank, due to the pressures on the technical sector and cryptocurrencies in conjunction with the rise interest rates.
The announcement of these bankruptcies played a significant role in spreading losses in global stock markets at the beginning of Monday’s trading, as the Japanese banking sector recorded a decline of nearly 5%, pushing Japanese stock indices to decline by more than 1%.
On the European continent, due to fears of the spread of contagion to the banking sector, European stock indices recorded the worst daily trading in 2023, coinciding with the announcement of the British government and HSBC, the latter’s acquisition of the “Silicon Valley Bank” business in the United Kingdom. For one pound sterling.
The Stoxx Europe 600 index fell by 2.82%, and the British FTSE 100 index fell by 2.5%. The German “DAX” fell 3.36% to 14906.05 points, and the French “CAC” fell 2.48% to 7043 points.
During today’s trading, the Wall Street fears index recorded its highest level since last October, reaching 30.15 points, on the back of the crisis of the collapse of those banks, which directed US stock futures contracts to decline again after rising in the beginning of trading.
Goldman Sachs said on Sunday that it does not expect to raise interest rates in light of the recent pressures on the financial sector. The European Central Bank is set to raise interest rates by 50 basis points later this week.
The bankruptcy of Silicon Valley Financial Group, a group focused on tech startups, last Friday is the largest bank collapse in the US since the 2008 financial crisis.
Amidst those fears, investors rushed to safe assets, as metal futures contracts for the yellow metal for April delivery rose at that hour of today’s trading, by 2.13%, to $ 1907 an ounce. The spot price rose by 1.55% to $1897.25 an ounce. Oil prices increased their losses sharply.
This came despite the US authorities taking emergency measures on Sunday to boost confidence in the banking system after the collapse of the Silicon Valley bank threatened to spark a wider financial crisis.
The US Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation said in a joint statement that all depositors of Silicon Valley Bank will have access to their funds starting today.
For its part, the Federal Reserve announced an emergency loan program aimed at strengthening the capacity of the US banking system and ensuring that banks are able to meet the needs of all depositors.
And the White House announced that US President Joe Biden will deliver a speech later today about the turmoil shaking the US banking sector, which has caused damage to global financial markets, and will also stress the need to “protect the historic economic recovery in the United States” after the bankruptcy of Silicon Valley and put it under public custody. .
Financial analyst Ahmed Ezz El-Din told Mubasher Information that the bankruptcy of the three banks resulted from a crisis in liquidity management and not due to poor testing or evaluation of companies operating in the technology sector. He pointed out that the companies affiliated to those banks will be affected, of course, by declaring bankruptcy. Traders advised the shares of companies operating in the technology sector to study the impact of the crisis on each specific company.
And economist Ali Hammoudi says: What went through the US markets in futures contracts during today’s session, Monday, is temporary stability, supported by expectations that the Federal Reserve will not raise interest rates.
Regionally, the Arab stock exchanges were affected by the global selling panic that is currently taking place in the world’s stock exchanges, as the Egyptian Stock Exchange index fell 3.13%.
The Qatar Stock Exchange index fell 1.5%, and the Saudi Tasi index fell 0.76%. Kuwait and Bahrain indices decreased by 0.25% for the first and 0.05% for the second. The Muscat Securities Market index rose 0.6%.
Ibrahim Al-Failakawi, a stock market expert, predicted that the fluctuations in the global and regional stock markets will continue until the situation becomes clear, and the depth and effects of that crisis, which began with the disclosure of the collapse of Silicon Valley Bank.
For trading and investing in the Gulf stock exchanges Press here
nominations:
One year after the war.. How were the financial markets affected by the Russian-Ukrainian crisis and where are they headed?
The stock markets of the Middle East are in red, with expectations of an imminent global recession.. Will the wave continue?