Global Stock Market: Dow and S&P fell sharply, as SVB collapse

 

Global Stock Market Indexes-Weekly Updates 

The global stock market indexes mostly closed lower during the week ending  10 March 2023. The US, European and Chinese markets closed in the deep red while Japan’s Nikkei ended with a modest gain. The global markets fell due to fear of aggressive interest rate hikes by the US Fed and sharp selling in banking and financial stocks.

 

The US Stock Market indexes- Weekly Updates

 

The US stock market indexes fell sharply over the week, after hawkish comments from the US Federal Reserves Chairman Jerome Powell in his congressional testimony. Powell indicated more aggressive interest rate hikes to control inflation. The US index Dow Jones closed as the worst week since June, while the S&P 500 Index fell to its lowest intraday level since January 5 on Friday. Smallcaps underperformed their larger peers, while value stocks fell more than their growth counterparts.

The US stock market indexes declined sharply in the last two sessions. The Financials stocks led the declines due to concern about the health of Silicon Vally Bank (SVB Financial). SVB Financial collapsed on Friday due to a direct impact of rising interest rates, marking the second-biggest bank failure in US history.

Trading was halted on SVB stocks and the Federal Deposit Insurance Corporation (FDIC) then placed the bank into receivership to protect depositors on Friday.  The SVB issue triggered selling pressure in the Banking and financial stocks across the globe on Friday, as investors were concerned about the growth of financial stocks 

Investor’s focus shifted from the monthly Job report to the SVB Financial crisis on Friday. Meanwhile, the official payroll report showed an increase of 311000 nonfarm jobs in February, above the market expectation of 200000. The Unemployment rate rose unexpectedly from January’s low of 3.4% to 3.6% in February. Average hourly earnings also increased a bit but less than expected.

After the SVB crisis, the central bank may not aggressively go for rate hikes in their upcoming meeting. It may stick to the existing policy of quarter basis point hikes to prevent further stresses in the financial system. Treasury yields which had jumped to their highest level in more than a decade earlier this week fell sharply on Friday.

 

European Stock Market Indexes- Weekly Updates

 

The European stock market indexes declined during the week as investors concern about stress in the banking system and the potential effects of elevated interest rates for the longer period.

The market sentiment was hit after Eurozone economic growth in the fourth quarter of 2022 was revised down to 0% from an initial estimate of 0.1%. The latest data showed that consumer demand weakened in January and retail sales grew at much less than it was expected.

German’s industrial production growth was reported stronger in January while retail sales decline sequentially. UK economy growth rebounded by more than expected in January, mainly due to growth in the services sector.

 

Asian Stock Market Weekly Updates

 

Japan’s stock market index registered a modest gain during the week despite a sell-off in Japanese bank stocks on Friday. The sentiments remain positive as The Bank of Japan (BoJ) kept its accommodative monetary policy unchanged in March, as widely expected.

The weakening of the Japanese yen on the dovish BoJ and rising dollar indexes supported the exporters’ sentiments during the week. Japan’s economic growth over the Dec 2022 end quarter was downgraded from the earlier estimated numbers.

Chinese equity markets closed lower over the week as Bejing set a lower-than-expected economic growth target for 2023, due to concerns about the country’s weakening demand and outlook.

The consumer price index rose cooler than it was expected in February, pointing to a  weakening of demand in the country. The exports and imports data showed an extended decline in the first two months of the year due to the global economic slowdown that hit trade activity.

 

If you like the post “ Global Stock Market: Dow and S&P fell sharply, as SVB collapse “ please share it with others.

 

You may also like to read,    Indian Stock Market Weekly Update (6- 10 March 2023)

                                                   Best Options Trading Books in India-Must Read 2022     

 

Happy Investing!!

Editor’s Desk