Banking sector lifted once again
The S&P 500 increased on Monday due to relief in the banking sector. This came in form of First Citizens BancShares signed an agreement to acquire failing Silicon Valley Bank (SVB). However, a decline in the technology sector limited gains.
First Citizens BancShares acquired all of SVB remaining assets, deposits, and loans for $72 billion, a discount of $16.5 billion. First Citizens BancShares, which is anticipated to enter the top 20 US banks as a result of the transaction, increased by more than 55%.
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In addition to the SVB transaction, news that US officials are considering expanding the Federal Reserve’s emergency financing program to regional banks also improved optimism. First Republic Bank was up 15%, Comerica was up 6%, and Bank of America Corp was up 5%.
A pause in the technology sector capped market advances. Microsoft, Alphabet, Meta and Apple traded in the red by over 1.5%. The S&P 500 finished the day up 0.18%, the Dow Jones was up 0.6%, and the tech-heavy Nasdaq was down 0.47%.
Risk-taking appetite pushed the US dollar to the background
EUR/USD reverses two consecutive days of declines and advances after hitting a session low of 1.0744. Despite rising US Treasury bond rates, improved risk appetite and a weaker US dollar paved the way for more euro gains.
US Treasury bond rates rebounded, with 2-year yields fluctuating around 4% and 10-year yields at 3.515%, an increase of thirteen basis points. The US dollar Index (DXY) fell 0.19% to 102.915, failing to profit on the increase in US bond rates.
US 10-year Treasury yield, source: CNBC
As JPY is viewed as a safe-haven currency, the yen depreciated versus the dollar. The USD/JPY pair rose 0.7% to 131.60. GBP/USD added to the gains with a 0.5% increase to 1.2291.
Crude is the risk-on star
The price of crude rose as much as 5% on Monday’s stoppage of 500,000 barrels per day of Kurdish supplies. Vladimir Putin’s nuclear war bluster, and reassurance about the crisis-stricken US financial system also contributed to a risk-on appetite in oil.
WTI closed $3.55 higher, or 5.1%, at $72.81 per barrel. Monday’s gains contribute to the latest bounce in the US crude, which increased 3.8% the previous week after falling 13% the week prior. Brent crude closed up $3.13, or 4.2%, at $72.
Gold on the other hand, fulfilled the safe haven status and is declining with the hightened risk apetite. The new gold contract for June delivery ended 1.3% lower at $1975.80. Silver followed, with the May contract ending 0.54% lower at $23.210.
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