Respite in global stock markets as bank stocks rally after Silicon Valley bank rout
Global stock markets rebounded from the rout triggered by the Silicon Valley Bank collapse – even as the entire US banking sector was downgraded.
In a day of respite for investors from recent turmoil, crisis-battered regional US lenders drove Wall Street higher while major benchmarks in the UK and Europe also rallied.
San Francisco-based First Republic Bank jumped 27% after falling 62% on Monday, Western Alliance rose 14.4% after falling 47% and Keycorp jumped 4% after falling 27%. %.
Bouncing back: On a day of respite for investors, crisis-battered regional US lenders drove Wall Street higher while major benchmarks in the UK and Europe also rallied
Los Angeles-based PacWest climbed 33.9%, but Salt Lake City, Utah-based Zions Bancorp closed 3.3%.
The rally – after global financial stocks around the world saw £385bn wiped out in value following the collapse of SVB – came despite a damning report from Moody’s.
The rating agency reduced the outlook for the US banking system from “stable” to “negative” after a “rapid and substantial decline in confidence among bank depositors and investors”.
And while UK banking stocks also rebounded, there was little respite for Credit Suisse as the troubled lender sparked fresh fears over its future after discovering “significant weaknesses” in its reporting procedures for 2021 and 2022.
The SVB collapse also wreaked havoc on government bond markets, with the yield on two-year US government debt suffering its biggest one-day drop since 1987 on Monday before rebounding yesterday.
The crisis led President Biden to call on the United States “to strengthen the rules applicable to banks in order to reduce the risk of this type of bank failure happening again”.