DAILY MARKET NEWS - 28-03-2023

Ariff Azraei

Finally! After weeks of searching for a buyer, SVB is finally sold. First Citizens BancShares announced that it will acquire failed Silicon Valley Bank in a deal that will trigger an estimated $20 billion hit to a government-run insurance fund. The FDIC will backstop the deal, and First Citizens will not pay cash up front. Instead, it granted equity appreciation rights in its stock to the FDIC that could be worth up to $500 million. First Citizens will assume Silicon Valley Bank's assets of $110 billion, deposits of $56 billion, and loans of $72 billion as part of the deal. Silicon Valley Bank's collapse triggered the worst banking crisis since 2008, pummelling banking stocks globally. But does it mean that the banking crisis is over? The banking sector is still facing panic and fear, with concerns spreading to Germany's largest bank, Deutsche Bank. While Deutsche Bank is healthier than Credit Suisse, investors are sceptical about its ability to withstand the challenging banking environment ahead.
On Monday, the S&P 500 had small gains due to rising bank shares from a deal involving Silicon Valley Bank's sheets that pushed its buyer First Citizen 53% higher, while a decrease in technology-related stocks limited overall gains. Micron Technology's quarterly earnings are in focus as oversupply in computer parts pushes prices down.
Gold settled above $1,950 on Monday as risk sentiment improved, but markets remain worried about the state of the banking sector in the EU as credit default swap costs surged. There is too much opportunity in other markets that is weighing on gold.
Oil prices fell slightly after rising rapidly on Monday, with the focus on the banking crisis and improving demand in China. The dip is expected to be temporary, with the prevailing trend in the near term being dip-buys in crude oil.
The US dollar weakened as investor confidence in the banking sector increased. The dollar index was down 0.2% at 102.62. The stability in the banking sector has reduced demand for the dollar, which is usually seen as a safe haven in times of stress. The market now expects a pause in the Federal Reserve's interest-rate hike in May.

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