Will stock markets continue their decline on Monday?

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Last Friday, the leading Swiss index SMI hit a year low of 10,720 points. The index lost 1.7 percent at the close.

The turmoil in the US banking sector responsible for the collapse: Shares of Silicon Valley Bank (SBV) also fell after the collapse of crypto bank Silvergate Capital. This illustrates the dangers that may accompany the recent rise in interest rates.

The US Federal Reserve has now announced that it will hold a closed meeting for Monday. The Fed announced on Sunday that its focus will be primarily on advance and discount rates. The discount rate is an interest rate for bills of exchange. As the online portal cash.ch wrote, the central bank did not provide any details. Now, at the beginning of the week, the question of how the stock markets will react to this comes to mind.

banks under pressure

When SBV collapsed, nearly $80 billion in market capitalization disappeared in an instant. The price drop was so severe that trading of the shares was suspended due to the acute emergency. The Dow Jones fell 1.1 percent on Friday. Banks in Switzerland also came under pressure: UBS shares lost 4.5 francs, while Credit Suisse’s price hit an all-time low of 2.41 francs.

Meanwhile, SBV, which specializes in startup financing, was temporarily closed and placed under government control. Emergency recapitalization had failed before. Customers should be able to regain access to their funds by Monday morning at the latest.

Initial recovery plans

As Bloomberg wrote, there are now initial plans to secure bank deposits in the US. The US Deposit Insurance Fund and the US Federal Reserve seem to be considering creating a fund.

The crisis went unnoticed by bitcoin, which fell below the psychologically significant $20,000 on Friday. Since then, the price has recovered somewhat. The uncertain future for national banks’ monetary policy is causing more headaches. (SDA/kae)

Source :Blick