GLOBAL MARKETS-Silicon Valley Bank knocks bank stocks, U.S. payrolls beat expectations

Markets were pricing in a 60% chance of a 25 basis point hike by the Fed on March 22. WEAK CRUDE Crude oil was heading for its biggest weekly loss in five weeks on worries about the prospect of steep interest rate rises in the United States slowing growth and hitting fuel demand. The yen erased earlier losses on the Bank of Japan keeping stimulus settings steady, while the dollar eased against the Swiss franc ahead of the U.S. data.

Global stocks remained near two-month lows on Friday as the U.S. economy added jobs at a solid clip last month, pointing to another interest rate rise by the Federal reserve later this month to quell inflation.

The MSCI All Country stock index was down 0.4%, after hitting its lowest level since mid-January. U.S. non-farm payrolls increased by 311,000 jobs last month, the Labor Department said, with January revised lower to show 504,000 jobs instead of a previously reported 517,000.

"Combined with other jobs data we've had this week its becoming clear the U.S. jobs market is cooling but likely not fast enough yet for the Fed," said Frances Donald, chief economist and strategist at Manulife Investment Management. U.S. stock index futures firmed after the payrolls data, pointing to a higher start on Wall Street.

Banking stocks, however, were under pressure after news on Thursday that SVB Financial Group, which does business as Silicon Valley Bank, had sought to reassure tech clients as its stock collapsed by 60% while it was attempting to raise funds to plug a $1.8 billion hole caused by the sale of a loss-making bond portfolio. Silicon Valley Bank, whose shares were down more than 40% in premarket trading on Friday before being suspended, raised questions over the unrealised losses on bond portfolios among U.S. banks, and what that could mean for capital requirements, analysts said.

The contagion concerns rippled through lenders in Europe. The STOXX index of European bank shares sank 3.7% to its lowest level in more than a month, with Credit Suisse hitting an all-time low. "I think it's panic and it's company specific," said Patrick Spencer, vice-chair of equities at RW Baird, adding it was a further sign of how the rise in borrowing costs and the end of cheap money was shaping markets.

ING bank said U.S. Federal Reserve Chair Jerome Powell has explicitly referred to Friday's jobs data as a key driver, together with next week’s U.S. inflation figures, ahead of the Fed’s policy decisions on March 22. Powell has warned rates could rise further and faster if Friday's data shows that is needed to get a grip on inflation.

The yield on short-end Treasuries fell to 4.7441%. Markets were pricing in a 60% chance of a 25 basis point hike by the Fed on March 22.

WEAK CRUDE Crude oil was heading for its biggest weekly loss in five weeks on worries about the prospect of steep interest rate rises in the United States slowing growth and hitting fuel demand.

The yen erased earlier losses on the Bank of Japan keeping stimulus settings steady, while the dollar eased against the Swiss franc ahead of the U.S. data. The yen weakened and Japanese government bond yields plunged after the Bank of Japan opted to keep stimulus settings steady as expected at Governor Haruhiko Kuroda's last meeting in charge.

The benchmark 10-year JGB yield, which the BOJ pins within 50 basis points either side of zero, pulled back sharply from that ceiling to last sit at 0.445%. The yen was up 0.5% at 136.679 per dollar after a knee-jerk drop of as much as 0.6%. Japan's Nikkei pared earlier losses to be down 1% after the central bank decision but selling began later in the session and the index was off 1.7%.

Bitcoin was off 1% at $20,164 as the fallout from the demise of Silvergate weighs on the broader mood in digital assets. Crypto-focused lender Silvergate said it was closing down. Brent crude futures eased 0.7% to $82.19 a barrel while gold was up 0.6% at $1,843 an ounce.

 

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)