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Market sentiment remains fragile in view of turbulence in the US banking sector

The banking crisis in the US, triggered by several bankruptcies, initially caused heavy losses on European stock markets at the beginning of the week. On Wall Street, share prices stabilized, thanks in part to the rapid intervention of the US government authorities. Signs of uncertainty, however, can be observed in the gold price, which rose to its highest level since the beginning of February. Nervousness on financial markets is likely to continue in view of fears of a spreading of the banking crisis in the United States. 

Alessandro Fezzi, LGT
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5 minutes
Global stocks drop
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Silicon Valley Bank (SVB), which ran into trouble last week, continues to cause volatility in financial markets. The Californian bank, which specialized in start-up financing, had to be closed for the time being after a failed emergency capital increase, placed under government control and supported by the Federal Reserve (Fed) and the Treasury Department. At times, there was also speculation that the Fed might ease interest rates because of fears of a spreading of the banking crisis. In view of the persistently high inflation, however, this seems unlikely at present. In Europe, the leading eurozone index fell by around 3%, dropping to its lowest level in almost two months. On the New York Stock Exchange, prices stabilized at the first trading day of the week. The Dow Jones Industrial ended Monday's trading at 31’819.14 points with a moderate daily loss of -0.28%. The market-wide S&P 500 fell 0.15% to 3’855.76 points. This, even though First Republic Bank, another regional bank, is in trouble thereby weighing on the entire banking sector. On the Nasdaq, the indices even rose by 0.8%, driven by acquisitions in the biotech sector: Pfizer wants to take over the cancer specialist Seagen and Sanofi bids for Provention Bio. 

On the bond market, the yield on ten-year US government securities fell back to as low as 3.5% and is currently quoted at 3.53% at a significantly lower level than a week ago when it stood just below the 4%-mark. 

In Asia, equity indices traded lower today in a volatile session, following the losses on Wall Street. In Tokyo, the Topix led the losses, falling 2.5%. The Nikkei 225 lost 2.1%. In Seoul, the Kospi also fell by almost 2%. In Hong Kong, the Hang Seng index was down 1.8% shortly before closing, and in mainland China, the Shanghai Composite fell 0.9% and the Shenzhen Component lost 1.1%. 

Corporate news in focus today: Annual General Meeting of Roche and Volkswagen AG with detailed annual figures (09:00 CET) and analyst conference (11:00). In addition, Generali will also present its annual figures

Economic data today in focus: Consumer prices Spain (February), industrial production Italy and from the US consumer prices for February (14:30).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi,
Source: LGT Bank (Switzerland) Ltd.

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