UK investors fear another crisis

Investors welcomed yesterday's rise in initial US jobless claims as a sign that the Fed’s monetary policy managed to cool an overheating economy. Meanwhile, miners underperformed after Chinese data showed weak demand for food and commodities. The FTSE 100 ended the session 0.6% lower.

Today, investors woke up to disturbing news, with a global rout in bank stocks sparked by Silicon Valley Bank, which was forced to raise capital after losing $1.8 billion selling its bond portfolio at a loss to meet demands for cash from depositors.

Investors now worry about the vulnerability of banks, fearing the same problems that led to the 2008 financial crisis. The FTSE 100 index was down 1.6% this morning, with HSBC down 4.8% and Barclays down 3.6%.

Investors are awaiting U.S. non-farm payrolls data at 1.30 pm London time. Data showing that the job market is cooling down could mean that the Fed would be going for a lower 25 basis points rate hike rather than 50.

Meanwhile, the Office for National Statistics showed the British GDP grew more than expected in January, by 0.3%.

 

Things to read today:

Robert Armstrong: SVB is not a canary in the banking coal mine (Financial Times)

One Bank Folds, Another Wobbles And Wall Street Asks If It’s a Crisis (Bloomberg)

Silicon Valley Bank’s struggles spell further trouble for beleaguered tech startup market (CNBC)