All crises include strong stock market falls in their damage menu, but not all market crashes are synonymous with crises.
Analysts are wondering what kind of danger they face now.
The sudden decline of the large indices this Thursday on Wall Street, which went from trading practically flat to going downhill in the last three and a half hours of the session, then replicated by stocks in Asia and this morning in Europe, has some of the ingredients that have sprinkled the blackest chapters in recent years.
There is a bank in trouble: Silicon Valley Bank, whose activity is to provide financing to
that seek to break through in the competitive jungle of technology companies —a risk that traditional commercial banks happily avoid running—, there is a contagion effect on the prices of all the large North American and European banks, and as a backdrop, there is a soaring inflation against which central banks are deploying their entire arsenal.
The trigger, the fall from grace of the Silicon Valley bank, shows dizzying numbers: its shares collapsed 60% this Thursday, and in operations prior to the opening of the market they already anticipate another colossal bump, more than 40%.
The alarms went off when the entity announced that due to a decrease in deposits and being forced to part with losses from its bond portfolio, it will sell 1,750 million dollars in new own shares to shore up its balance sheet.
The reaction of investors was relentless, and the bank's capitalization closed below 6,000 million euros, when a couple of days before it had tripled that amount.
In a sector as interconnected as banking, questions about the extent to which other firms would be hurt if the Silicon Valley funder ends up falling tend to scare away the most conservative money, the one that, just in case, does not wait to see the outcome, for if it was too late.
That produced a spiral of fear and nervousness in the indices that group the banks, with reductions of 6.6% in the case of those that are part of the S&P 500. None of the big names was spared: Bank of America left the 6.20%, Wells Fargo 6.18%, JPMorgan 5.41% and Citigroup 4.10%, in their worst moment since the pandemic.
At the end of the day, the Dow Jones, the S&P 500 and the technological Nasdaq, the three big Wall Street indices, were close to a 2% correction.
Silicon Valley Bank headquarters in Santa Clara (California), this Thursday.
David Paul Morris (Bloomberg)
The European bank is receiving the stake with similar movements.
Two hours after the start of the session on the continent, Deutsche Bank loses 7%, Banco Santander falls 5.32%, the same as the Dutch ING, and the Parisian BNP Paribas recoils 4%, a setback similar to that of the BBVA.
This is heavily penalizing the Ibex 35, the Spanish index that brings together the largest listed companies in the country, where the presence of banks is greater than in other European countries, and has come to sink more than 2%.
While uncertainty persists about the future of the financial group, in full withdrawal of funds from its clients, wary of being trapped if it goes bankrupt, eyes are also pointing to other fronts.
This Friday the employment data in the United States will be released, and although it may seem contradictory, Wall Street's premise is that the worse the better. the key requirement for inflation to deflate and, therefore, for the Federal Reserve to park the rate hikes that are dragging the economy into recession.
In addition, in the peephole is the bankruptcy of Silvergate Capital, a bank specializing in services for cryptocurrency businesses, which has announced its liquidation due to the difficult regulatory environment and the poor evolution of the crypto industry in recent times.
Silvergate was one of the victims of the bankruptcy of FTX, one of the largest cryptocurrency buying and selling platforms, which has not returned the funds to its clients.
Bitcoin falls 8% this Friday and loses the $20,000 barrier, its lowest level in two months.
Only gold, a traditional refuge value in times of turbulence, resists with its price slightly in the green, above $1,800 an ounce.
Despite the disaster, the world stock markets are experiencing a very positive start to 2023.
The Ibex 35 has risen by more than 10%, slightly above the Frankfurt and Paris parquets.
The US technology Nasdaq also accumulates double-digit gains, ahead of the S&P 500 (2% up) and the Dow Jones 30 (2% down).
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