The collapse of the Silicon Valley Bank (SVB) on March 10, triggered a sell-off in financial stocks around the world. The two-day sell-off triggered a $465 billion wipe-out as reported by Bloomberg. Investors from New York to Japan are in hurry to cut their exposure amid the uncertainty in the markets.
The Asian markets experienced losses from the domino effect of the SVB collapses. MSCI Asia Pacific Financials Index dropped by 2.7%, Mitsubishi UFJ Financial Group Inc slipped by 8% in Japan, Hana Financial Group Inc of South Korea fell 4.7% and Australia’s ANZ Group Holdings Ltd lost 2.8%. While the Federal Reserve was quick to step in and assure depositors, the question arises of the impact that the government’s intervention has on the problem of banks collapsing in the long term.
Analysts gauge that investors are worried about the impact of the SVB collapse on large investment avenues such as bonds. The two-year Treasury yields recorded their largest single-day drop since the 1980s, on March 13. The question of whether the Federal Reserve is going to raise interest rates or avoid increasing interest rates in light of the banking crisis has increased uncertainty among investors.
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