^

Business

Stocks extend rally as bank panic eases

Agence France-Presse
Stocks extend rally as bank panic eases
A display lists Silicon Valley Bank (SVB) achievements as customers gather to withdraw money at SVB’s headquarters in Santa Clara, California, on March 13, 2023. US President Biden sought to reassure Americans over the country's banking system on Monday, while insisting emergency measures would not be paid for by taxpayers, as additional banks came under stress following the collapse of Silicon Valley Bank last week, the second largest bank failure in history, and New York regulators took control of Signature Bank on Sunday.
NOAH BERGER / AFP

NEW YORK, United States — Stock markets extended gains on Tuesday, with bank shares rallying as fears of a financial crisis eased after authorities moved to shore up the sector.

Authorities in leading economies have pledged support for depositors and troubled lenders in efforts to calm markets, following the recent collapse of Silicon Valley Bank (SVB) and Signature Bank in the United States.

The US banking sector is now "stabilizing," Treasury Secretary Janet Yellen told an American Bankers Association (ABA) conference on Tuesday.

"Our intervention was necessary to protect the broader US banking system," she said, hinting that further interventions could follow "if smaller institutions suffer deposit runs that pose the risk of contagion."

Deposit withdrawals have steadied after US authorities stepped in more than a week ago to ensure SVB and Signature customers would still have access to their funds.

The US Federal Reserve also introduced a new lending tool for banks in an effort to prevent a repeat of SVB's quick demise.

This week, the Fed launched a drive with other major central banks to improve lenders' access to liquidity.

The actions taken "reduced the risk of further bank failures," said Yellen.

US stocks ended higher, logging a second day of gains ahead of a key interest rate decision by the Fed as policymakers try to balance their inflation fight against financial sector turmoil.

 

'Strong trust'

In Europe, Andrea Enria, head of the ECB Supervisory Board, told a European Parliament hearing that European banks still retained the "strong trust of depositors" despite "a period of turmoil."

But there was no sign of major outflows of deposits from European Union institutions.

The turmoil had led to the Swiss government-backed buyout of troubled Credit Suisse by UBS for around $3.2 billion after frantic negotiations over the weekend.

Analysts warned it was too early to declare victory, with the Credit Suisse takeover raising questions about which bank could be next on the chopping block.

"It's been a wild couple of weeks and while I, along with everyone else, am hopeful that the worst is behind us, I can't say I'm particularly confident," said Craig Erlam, analyst at OANDA trading platform.

While authorities can be commended "for their firefighting skills, only time will tell if they've been successful in extinguishing the flames," he said.

Europe's main indices finished around one and a half percent in the green as a relief rally continued following last week's drubbing, with European bank shares surging, notably Commerzbank and Barclays.

On Wall Street, shares of First Republic Bank ended around 30 percent higher as the Wall Street Journal reported that JPMorgan Chase was leading talks with other big banks on providing fresh support to the troubled lender.

Major US banks already agreed to inject $30 billion into First Republic last week.

The spotlight will turn to the US Fed on Wednesday, when it will announce its latest interest rate decision.

The upheaval in the banking sector has led traders to re-evaluate their bets on the Fed's plans, with speculation swirling that it could cut borrowing costs by the end of the year to provide further stability.

This would follow a series of aggressive rate hikes carried out by the Fed and other central banks since late 2021 aimed at cooling soaring inflation.

Before the banking sector's woes began, expectations were for US borrowing costs to go as high as six percent, but now forecasts are for them to end at around four percent from a current 4.5-4.75 percent.

ASIAN STOCK MARKETS

CREDIT SUISSE

GLOBAL STOCK MARKETS

SVB

WALL STREET

Philstar
  • Latest
  • Trending
Latest
Latest
priority latest
Array
(
)
latest
Array
(
    [0] => Array
        (
            [ArticleID] => 2272147
            [Title] => Philippine dollar reserves inch down in May
            [Summary] => Data provided by Bangko Sentral ng Pilipinas on Wednesday showed that gross international reserves inched down 0.49% month-on-month to $101.3 billion as of end-May. 
            [DatePublished] => 2023-06-07 17:38:00
            [isSticky] => 0
            [Focus] => 1
            [PostType] => Standard
            [ColumnID] => 0
            [Alias] => 
            [AuthorID] => 
            [AuthorName] => 
            [SectionName] => Business
            [SectionUrl] => business
            [URL] => https://media.philstar.com/photos/2023/04/05/collage-maker-05-apr-2023-03-04-pm-7871_2023-04-05_15-07-09857_thumbnail.jpg
        )

    [1] => Array
        (
            [ArticleID] => 2272141
            [Title] => World Bank upgrades growth outlook on Philippines, but inflation still a threat
            [Summary] => The World Bank said the Philippine economy would likely grow faster than initially projected this year on the back of strong consumer demand, although high inflation remains a big threat.
            [DatePublished] => 2023-06-07 16:59:00
            [isSticky] => 0
            [Focus] => 1
            [PostType] => Standard
            [ColumnID] => 0
            [Alias] => 
            [AuthorID] => 
            [AuthorName] => 
            [SectionName] => Business
            [SectionUrl] => business
            [URL] => https://media.philstar.com/photos/2023/06/07/h1642023_2023-06-07_16-50-43630_thumbnail.jpg
        )

    [2] => Array
        (
            [ArticleID] => 2272133
            [Title] => UP econ profs: 'Defective' Maharlika bill has unclear purpose, risky structure
            [Summary] => In a strongly-worded paper that outright calls the Maharlika Investment Fund “defective” and violative of economic principles, faculty members of the University of the Philippines School of Economics have expressed their reservations with the Marcos pet measure.
            [DatePublished] => 2023-06-07 15:54:00
            [isSticky] => 0
            [Focus] => 1
            [PostType] => Standard
            [ColumnID] => 0
            [Alias] => 
            [AuthorID] => 1807493
            [AuthorName] => Cristina Chi
            [SectionName] => Business
            [SectionUrl] => business
            [URL] => https://media.philstar.com/photos/2023/06/07/sad12312321sadsadas_2023-06-07_15-54-57627_thumbnail.jpg
        )

    [3] => Array
        (
            [ArticleID] => 2272131
            [Title] => Globe unveils prepaid fiber internet offer
            [Summary] => In a statement on Wednesday, the telco indicated that the offering will float an offer to consumers to pay P1,499 for the service. 
            [DatePublished] => 2023-06-07 15:47:00
            [isSticky] => 0
            [Focus] => 1
            [PostType] => Standard
            [ColumnID] => 0
            [Alias] => 
            [AuthorID] => 
            [AuthorName] => 
            [SectionName] => Business
            [SectionUrl] => business
            [URL] => https://media.philstar.com/photos/2021/09/29/globe-lead_2021-09-29_12-28-09758_thumbnail.jpg
        )

    [4] => Array
        (
            [ArticleID] => 2272128
            [Title] => Philippines needs updated tax laws for the digital economy — PIDS
            [Summary] => The Philippines needs to optimize its tax laws to improve the collection of taxes on digital transactions, including those by foreign companies, to boost state revenues and help bridge a wide budget deficit, according to a new study.
            [DatePublished] => 2023-06-07 14:36:00
            [isSticky] => 0
            [Focus] => 1
            [PostType] => Standard
            [ColumnID] => 0
            [Alias] => 
            [AuthorID] => 1807775
            [AuthorName] => Nyah Genelle De Leon
            [SectionName] => Business
            [SectionUrl] => business
            [URL] => https://media.philstar.com/photos/2019/10/28/netflix-chill_2019-10-28_12-19-48914_thumbnail.jpg
        )

)
abtest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

FORGOT PASSWORD?
SIGN IN
or sign in with