US authorities were swift to launch emergency measures on Sunday to shore up confidence in the banking system after the failure of Silicon Valley Bank (SVB) threatened to trigger a broader financial crisis. After a dramatic weekend, regulators said SVB customers will have access to all their deposits starting Monday and set up a new facility to give banks access to emergency funds.
But equity markets were still feeling the jitters as most of the major global markets, except China and Hong Kong, were in the red. Eurozone (Stoxx 50), Germany (DAX) and France (CAC-40) were all down over 3% while the UK (FTSE) was down 2.5%. In early trade, US market indices also showed a downtrend.
In early trade, the Sensex gained 375 points as the SVB collapse stoked hopes that Fed will apply brakes on interest rate hikes. However, things soon turned for the worse and the Sensex closed almost 900 points down. Foreign institutional investors continued their flight by selling shares worth `1,546.86 crore. Domestic institutional investors provided some support to the market by buying shares of `1,418.58 crore. In the past two trading sessions since the SVB collapse, Indian markets have faced the brunt of the Bank Nifty falling 4.10%.
In a statement on Sunday, US President Joe Biden said: “I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”
“The American people and American businesses can have confidence that their bank deposits will be there when they need them,” the statement added.
Asian indices were, however, a mixed bag. Hong Kong (Hang Seng) rose 1.95%, China (Shanghai Composite) gained 1.2%, and South Korea (KOSPI) edged up 0.67%, while Singapore (STI) fell 1.42% and Japan (Nikkei) shed 1.11%. Australia (ASX200), too, slipped 0.5%.
On March 10, 2023, SVB collapsed, causing the largest bank failure since the 2008 financial crisis and the second-largest in US history. This is expected to have a significant impact on startup funding across the world.