A tumultuous week in U.S. financial markets ended on a note of uncertainty on Friday, with a $30 billion major bank deposit at First Republic Bank failing to calm investors.
Last week, the sudden collapse of three US banks, Silvergate Capital and Signature Bank
and Silicon Valley Bank — have begun to rekindle concerns about fragility in the banking sector amid higher interest rates.
SVB Finance Group
It filed for Chapter 11 bankruptcy on Friday and said it will seek court-supervised reorganization. Silicon Valley Bank was placed into federal receivership following a run on its deposits.
Within days, other regional banks and financial institutions were engulfed in selling.
First Republic Bank
Another mid-sized California bank saw its share price hit an intraday record low this week, before the bank pledged $30 billion in deposits from a group of the nation’s biggest banks, including JPMorgan Chase.
Bank of America
In Europe, shares of Swiss banking giant Credit Suisse
A share fell to about $2 in New York trading. The bank said on Thursday it plans to borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank to boost its liquidity. Shares of the New York-based bank fell 33.9% year-to-date on Friday.
Take a look at the major changes in the financial markets over the past week or so.
Shares of SPDR S&P Regional Bank ETF
That includes the regional banks sector of the broader S&P 500 index, which has fallen 24.5% in the past seven trading days since March 9, a day after SVB announced it had sold a portfolio of bonds at a loss of more than $1 billion. Depositors began fleeing and the bank was closed by regulators on March 10.
The Treasury, the FDIC and the Federal Reserve on Sunday announced guarantees for all deposits at Silicon Valley Bank and Signature Bank to boost confidence in the banking industry.
Shares of the SPDR S&P Regional Bank ETF fell 6% on Friday. Shares of First Republic Bank tumbled 32.8% as $30 billion in deposit inflows failed to calm jittery investors.
A selloff in bank stocks dragged down the broader stock market and left the S&P 500 index
With a 2.1% decline since March 9, it briefly erased the large-cap benchmark’s gains in early 2023.
The S&P 500 ended Friday down 1.1%, but gained 1.4% for the week, according to Dow Jones market data. It was up 2% year over year as of Friday.
Nasdaq Composite Index
The Dow outperformed the industrial average by 4.45 percentage points this week, its biggest weekly performance since March 20, 2020, according to Dow Jones Markets data.
Advances in the biggest technology and semiconductor names helped limit losses in the Nasdaq 100 index, which tracks the top 100 technology companies on the Nasdaq stock market.
Nasdaq Composite Index
Friday ended lower, but the Dow Jones industrial average posted a weekly gain of 4.4%.
Down 0.2% on the week.
See: Investors are doing well as Microsoft, Apple and Meta seek safety in megacap tech stocks
The bond market also had a one-week high. The yield on the 2-year Treasury note
The drop was 74 basis points, the biggest weekly decline since October 1987, according to Dow Jones market data, marked by the black Monday stock market plunge.
See: Why stock market volatility has been so high since the 2008 financial crisis amid the collapse of banks
Adding to its swings, February’s CPI report showed little progress in easing high inflation, which failed to ease over the weekend. The policy-sensitive 2-year Treasury yield fell 28.4 basis points to 3.846% on Friday. This is the lowest level since September 14, 2022.
Trading has also been active in the Fed-futures market, with odds on Friday showing a 40% chance the Fed won’t meet next week and a 60% probability. 4.75%-5%, respectively CME FedWatch tool.
Gold prices rose 8.1% over the past seven trading days, ending Friday at an 11-month high and posting their best weekly gain in nearly three years, according to Dow Jones market data. Fears of further pressures on the banking sector weighed on investor sentiment, boosting the safe haven of the yellow metal.
Gold futures for April delivery
Comex rose $50.50, or 2.6%, to $1,973.50 an ounce on Friday, up 5.7% for the week. It was the highest settlement for the yellow metal since April 18, 2022 and its biggest weekly advance since April 2020, according to Dow Jones Markets data.
ICE US Dollar Index
A measure of the greenback’s strength against a basket of rivals, it has fallen 1.5% since last Thursday. The dollar closely tracks moves in the 2-year yield.
The dollar index rose on Wednesday morning as Credit Suisse liquidity renewed concerns about risks in the global banking system, prompting safe-haven buying of the dollar.
Oil futures, the most active U.S. contract, ended at their lowest in 15 months and posted their biggest weekly drop in nine months, according to Dow Jones Markets data.
The US benchmark for April delivery is West Texas Intermediate crude
It fell $1.61, or 2.4%, to $66.74 a barrel on the New York Mercantile Exchange, leaving the contract for a 13% weekly loss, according to Dow Jones market data.
The contract is down 14.2% over the past seven trading sessions, according to Dow Jones Markets data.
Silvergate Capital Corporation weighed in on the price of Bitcoin last Wednesday.
Its crypto-friendly Silvergate Bank said it would freeze operations and liquidate, aiming to withdraw all deposits.
However, Bitcoin rallied more than 20% over the past nine sessions to trade at $26,750.50 on Friday, following losses from SVB and Signature Bank. Data from CoinDesk.
Bitcoin has long been viewed with skepticism by the financial establishment, but its proponents have argued that it is an alternative to the traditional banking system.
See: What happened to Silvergate Capital? Why is it important?