On Friday, both European and US stock markets experienced a significant decline. First, European stocks saw drops, with the DAX and CAC down by 1.32% and 1.30%, respectively. The FTSE 100 also fell a staggering 1.67%, while the RTSI in the east declined over 0.86%.
The US’s Dow Jones Industrial Average fell by 1.07%, while the S&P 500 dropped 1.45%. The tech-heavy Nasdaq Composite Index also declined by 1.76%. These drops were partly caused by concerns over bank selloffs and losses, with banks losing a combined $150 billion by the end of the day.
SVB Failure Causes Turmoil in the Markets
The financial failure of SVB was a significant factor in the current market decline, with the bank going into receivership. The bank’s assets will be sold to compensate the SVB’s insured users. The bank is causing turmoil in the financial market as investors lose trust in the banking sector.
The panic is also spreading among CEOs in Silicon Valley as the impacts will be detrimental to their startups. In addition, the latest controversy involving crypto’s biggest banking helper, Silvergate, has shifted focus from financial markets to haven assets.
Traders Digesting NFP Data
Traders are now digesting the February payroll data, which showed increased US job growth. This data could lead to a more hawkish stance from the Federal Reserve, potentially leading to an increase in interest rates.
The latest non-payroll data showed an increase of 311,000 jobs in February, surpassing the expected 205,000. However, despite the strong job growth, the unemployment rate rose from 3.4% to 3.6%, which analysts did not expect. Analysts expected the rate to remain unchanged when hopes of a future dovish fed were alive.
Goldman Sachs lost 2.5% in the wider market, while Walt Disney saw a decline of almost 4%. Microsoft, Visa, and 3M also ended lower. Signature Bank was hit hard by the banking sector trend, dipping by 20%. However, Intel was one of the few firms to rally, up 3%. JP Morgan and Wells Fargo also defied the banking trend, with gains of 1.8% and 2.6%, respectively.
In overseas markets, stocks in the Asia-Pacific region were lower on Friday. The Nikkei 225 index lost over 1.7% in Japan, with the country’scountry’s dovish stance starting to feel heavy pressure from persistent inflation. The Shanghai Composite dipped 1.4% in China, reflecting the average regional drop.
Expect a Chaotic Week From Monday
As the markets move into the next week, investors will closely monitor the impact of the SVB developments and the NFP data on market sentiment. Some analysts predict a potential bloodbath in the markets as the news of the SVB financial failure continues reverberating across the financial sector.