Concerns over U.S. banks’ health trigger global stock sell-off | business news

Stock markets around the world, including in Britain, have retreated sharply amid concerns about the health of U.S. banks in a tougher economy.

Wall Street banks lost $80 billion in value Thursday afternoon after problems at two California banks.

First, a primarily cryptocurrency-focused lender called Silvergate announced that it was closing down after massive losses related to the collapse of the FTX exchange last year.

SVB Financial Group, parent of start-up lender Silicon Valley Bank, has since disclosed a stock sale to shore up its balance sheet as deposits from customers struggling to finance dwindle.

It pointed to higher-than-expected “cash burn” and rising capital costs.

SVB’s stock lost 70% of its market value, while shares of large US banks, such as JPMorgan Chase, fell more than 5% by the end of the day.

Silvergate only went public in 2019, but suffered huge losses after the collapse of the FTX exchange.Photo: Associated Press
Silvergate only went public in 2019, but suffered huge losses after the collapse of the FTX exchange.Photo: Associated Press

Banks and other financial stocks in Asia and Europe followed suit in Friday’s session.

Credit Suisse shares hit a record low, while Deutsche Bank fell 8%.

In London, HSBC and Standard Chartered led losses in the FTSE 100 at the open – amid a broad sell-off that also hit other sectors such as insurance companies and investment funds.

UK-listed banks were all down around 4-5% in morning trade, sending the FTSE 100 down more than 150 points, or 2%, at one stage of choppy trading.

RJ Grant, head of trading at Keefe, Bruyette & Woods in New York, said of the spark: “The Silicon Valley fundraising has everyone nervous about how people’s capital levels and deposits are performing.

“A lot of institutional investors don’t feel very good about owning certain banks right now.

“It just scares people because Silicon Valley has historically been a very strong, well-run bank. If they
Now with the problem, one wonders what about other banks that are lesser quality and don’t have the reputation of Silicon Valley Bank. “

“I think there is speculation that there is a broader problem with the U.S. banking system, or the possibility,” said ING economist Rob Carnell.

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Investors worried more broadly about the impact of rising interest rates, given signals this week from the head of the U.S. Federal Reserve that the central bank is far from ending its rate-hiking cycle to cool inflation.

While that would normally support bank stocks, they are holders of U.S. Treasuries and mortgage-backed securities, which were bought at rock-bottom prices and are now soaring on rising interest rates.

Market experts said there was a broad sell-off in bank shares after SVB raised $2.25 billion, in response to a $1.8 billion loss on the sale of a $21 billion portfolio.

The portfolio includes U.S. Treasury bonds and mortgage-backed securities.

Neil Wilson, chief market analyst at, said he didn’t think the reaction was a sign of any sort of financial crisis like the Lehman Brothers moment.

“SVB is not representative of the broader U.S. banking sector, although the plunge in SVB stock has clearly dampened sentiment,” he noted.

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