Global Stock markets were rocked on Friday with the news of Silicon Valley Banks shutdown. The Nasdaq led the way closing 1.76% down with the S&P and Dow also finishing well in the red as investors ran for the doors. The US banking industry dropped over $100 billion dollars’ worth of value in the last two trading days, however futures markets have bounced this morning in Asia as news that the US regulators have moved to limit that fall out. The Non-Farm Payroll number once again came in with a stronger print, however the unemployment rate and wage growth numbers dropped. The dollar dropped significantly in line with US treasury yields as Fed rate hike expectations cooled.
Global markets look set for further volatility as the fall out from SVB’s closure is digested by investors over the next few trading sessions and days. Fears of contagion across the sector have led to some sharp sell offs in banking stocks and safe haven trades were the order of the day on Friday. Almost an afterthought, was the key Non-Farm Payroll data which once again smashed expectation coming in at 311k against the expected 205K which on a normal day would have sent the dollar flying. The combination of cooling wage growth, increased unemployment rate and market turmoil saw the dollar take a beating on the day against most of the major currencies.
Looking ahead at today’s trading sessions and there is very little scheduled in terms of economic data releases or central bank speakers, but investors will be closely monitoring the news wires for any fresh updates on the SVB situation and the US reaction in general. The major data release focus for the week comes tomorrow in the form of the latest inflation (CPI) numbers out of the states with the market expecting a drop from last months number.
