Global Market – Banking crisis in US & Europe – Domino effect started?
This week we will discuss whether this ongoing crisis will have domino effect on US & European banking system and more banks will follow. This week we will also focus on US Fed & Bank of England monitory policy decision. Big question remains that whether market will witness domino effect in US & European ongoing banking crisis.
What is Domino effect?
“a cumulative effect produced when one event initiates a succession of similar events.”1 The term usually refers to something that is inevitable or at least very likely to happen, due to causal events that have already occurred.
Banking crisis in US & Europe – Domino effect started?
• 9-Mar-23: SVB report loss of $1.8 billion due to distress bond sale.
• 10-Mar-23: FDIC took control of SVB and closed SVB and FDIC insured depositors
• 12-Mar-23: FDIC shut down SIGNATURE BANK.
• 9-Mar-23: US regulator shut down SILVERGATE Bank – key bank in crypto world struggling after FTX and Genesis fall.
• 15-Mar-23: Credit Suisse as much as 30%, Swiss National Bank came to its rescue.
• 19-Mar-23: UBS agrees to buy Credit Suisse in an emergency deal aimed at stemming financial market panic.
• 16-Mar-23: First Republic Bank witness sharp sell-off as customer withdraw deposits. US Big 11 banks deposit $30 billion unsecured deposit.
Equichain Wealth Advisors: Market View & Opinion
Latest bank to show stress is DEUTSCHE Bank which is German bank and ECB will be central bank is focus. On Friday, ECB ‘s Lagarde told EU leaders ECB fully equipped to provide liquidity to euro area financial system, if needed – RTRS
Financial crisis in US & Europe is evolving, it will be difficult to predict the quantum of problem and market reaction to it, ECB raised interest rate by 50-bps on 16-Mar-23, US Fed raises interest rate 25-bps on 22-Mar-23 & BOE raised interest rate on 23-Mar-23.
Their comment on future rate hike has surely changed and it could be sign of pause as we see interest rate to peak around current level.