May 31, 2023

The bankruptcy storm of three major US banks hit the European, Gulf and Egyptian stock markets during Monday’s trading, while the main stock indices on Wall Street opened the Monday session lower amid fears of new bank collapses.

And in the third bank collapse within a week, the US authorities announced, on Sunday, the bankruptcy of “Signature Bank”, the largest lender in New York City under credit for low-income housing, to join both the “Silvergate Capital Bank” friendly to cryptocurrencies and the “Silicon Valley Bank” of a group. “SVB Financial Group”.

Egypt and the Gulf stocks declined
The Egyptian leading stock index fell 3.1 percent during Monday’s trading, affected by the 3.9 percent drop in the share of the Commercial International Bank, the country’s largest lender, on the back of the collapse of US banks. While most stock markets in the Gulf region continued to decline, Monday, for the second session in a row.

Fadi Riyad, chief market analyst at, said that the failures in the US banking sector are still affecting Gulf stock markets and have increased uncertainty about US monetary policy, according to Reuters.

The Federal Reserve (the US central bank) and the US Treasury announced on Sunday a set of measures to stabilize the banking system and said depositors in Silicon Valley Bank would have access to their deposits on Monday. Stock markets remain turbulent despite these efforts.

The Saudi index fell 0.8 percent, affected by a 1.5 percent decline in the share of Al-Rajhi Bank, and the decline in the share of Retal Urban Development Company by 0.8 percent. All banking stocks in Saudi Arabia fell, including the Arab National Bank, which fell 5.9 percent.

Dubai’s index closed 0.9 percent lower, with Emaar Properties dropping 2.9 percent. The Abu Dhabi index fell 1.6 percent. The Qatari index also fell 1.5 percent.

Oil drop
Oil prices, a major catalyst for Gulf financial markets, fell by four dollars, affected by the collapse of the Silicon Valley bank, but the recovery of Chinese demand provided some support.

By 10:01 GMT, Brent crude futures fell $1.44, or 1.7 percent, to $81.34 a barrel. US West Texas Intermediate crude futures also fell $1.40, or 1.8 percent, to $75.28 a barrel.

Fears of a continuation of crises in the aftermath of the collapse of the Silicon Valley bank led to selling operations in US assets at the beginning of the week.

The banking sector fell on the European Stoxx 600 index 5.7 percent, after losing 3.8 percent on Friday. The US authorities launched emergency measures on Sunday to boost confidence in the banking system.

Market sentiment is fragile as fears of the Federal Reserve (the US central bank) increasing monetary tightening due to high crude oil inventories in the United States, analysts at (ANZ Bank) said in a note Monday morning. A weaker dollar makes oil cheaper for holders of other currencies, which supports crude prices.

European stocks fell

European stocks fell today, Monday, with the continued decline in bank stocks in the region, despite the intervention of the authorities to limit the repercussions of the sudden collapse of Silicon Valley Bank.

The pan-European Stoxx 600 index was down 0.6 percent by 08:12 GMT, after closing at its lowest level in more than five weeks on Friday.

European banking stocks fell 1.1%, after witnessing the worst selling in more than five months over two days, amid concerns about the resilience of the sector’s balance sheet in the face of the collapse of Silicon Valley, in addition to expectations of raising interest rates.

Investors now see the odds of the Federal Reserve raising interest rates by 25 basis points next week as close to 90 percent, a drastic change from the 50 basis points they previously expected after strong economic data.

Goldman Sachs said on Sunday that it does not expect to raise interest rates in light of the recent pressures on the financial sector.

Meanwhile, the European Central Bank is set to raise interest rates by 50 basis points later this week.

Wall Street opens lower
The main stock indices on Wall Street opened lower today, Monday, affected by the decline in bank stocks, amid fears of a continuation of crises in the wake of the collapse of the Silicon Valley Bank, while expectations rose to stop raising interest rates in March.

The Dow Jones Industrial Average fell 89.71 points, or 0.28 percent, to open at 31,819.93 points.
The Standard & Poor’s index opened down by 26.47 points, or 0.69 percent, at 3,835.12 points, while the Nasdaq Composite Index lost 97.43 points, or 0.87 percent, to open at 11,041.46 points.

HSBC fell 0.1 percent after the British bank said it had acquired a unit of Silicon Valley Bank in Britain for 1 pound ($1.21), which means saving a major bank for lending to British technology start-ups.

US authorities took emergency measures on Sunday to boost confidence in the banking system after the collapse of a Silicon Valley bank threatened to spark a wider financial crisis.

Source / Agencies

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