Global stocks rose on Monday, after First Citizens BancShares will reassure the fragile markets by saying that it will assume the bankrupt’s deposits and loans Silicon Valley Bank. The agreement offered the markets some respite after several weeks of new bank collapses, bailouts or emergency aid from the authorities.
First Citizens BancShares Inc purchased all of SVB’s loans and deposits and gave the US Federal Deposit Insurance Corporation (FDIC) share appreciation rights of up to $500 million in exchange the FDIC said in a statement.
Seventeen former SVB branches will open as First Citizens branches on Monday. This entity buys about $72 billion of SVB assets at a discount of $16.5 billion, and the estimated cost of the SVB collapse to the FDIC’s deposit insurance fund is about $20 billion, according to the FDIC.
North Carolina-based First Citizens said in a statement that it did not buy other assets or debt from SVB Financial Group, the former parent of Silicon Valley Bank. “Silicon Valley goes to another buyer, which is good, but the bigger problem is guaranteeing the deposits of all the other (regional) banks,” said Tony Sycamore, an analyst at IG Markets in Sydney. “It’s a bit of calm before the next storm”, added.
What happens in Europe?
The pan-European index STOXX 600 it was up 1% at 0942 GMT and its banking measure soared 2.3% in early trading, before rising 0.8% later in the session.
In Europe, bank bonds are under pressure and credit default swaps (CDS), or the cost of insuring against defaults, remain worryingly high. The five-year CDS Deutsche Bank they hit their highest level since late 2018 on Friday, data from S&P Global Market Intelligence showed.
However, the actions of the Deutsche Bank They gained about 4% after leading the sector’s falls on Friday, when the cost of insuring the German bank’s debt against default risk soared.
S&P 500 futures were up 0.3% and Nasdaq futures were up 0.1%.
In China, the profits of industrial companies fell by 22.9% in the first two months of the year, affected by the shocks related to COVID. Blue-chip Chinese companies fell 0.4%, weighed down by geopolitical tensions. In general, The mood remained nervous due to concerns about banking tensions and their impact on global growth.
“Banks have been under enormous pressure. SVB and Credit Suisse have put banks under scrutiny for the impact that rising interest rates would have on certain credits”said Victor Balfour, of Rothschild & Co. in London. “But we don’t think these particular names are symptomatic of the broader banking system.”
The performance of the US treasury bonds over two years, it has fallen 92 basis points so far this month, to stand at 3.87%. This decline has been a drag on the dollar at times, at least against a haven asset like the yen, against which it was trading at 131.10, after hitting a seven-week low of 129.65 last week.
He euro suffered its own setback on Friday over concerns about the Deutsche and was trading at $1.0770 on Monday, far from last week’s high of $1.0930.
Falling yields, coupled with the flight from risk, have favored gold, which was trading at $1,970 an ounce after peaking above $2,009 last week.
Crude prices were little changed, racking up losses of almost 10% for the month, as global growth concerns undermined commodities across the board.
This Monday the futures of the brent oil they were up 30 cents, or 0.4%, at $75.29 a barrel. US crude West Texas Intermediate it was up 28 cents, or 0.4%, at $69.54 a barrel.
Last week, Brent rose 2.8% while WTI rallied 3.8% as jitters over the banking sector eased.
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