People look at signs posted outside an entrance to Silicon Valley Bank in Santa Clara, California. From winemakers in California to startups across the Atlantic Ocean, companies are scrambling to figure out how to manage their finances after SVB Suddenly shut down. Photo / AP, Jeff Chiu
People look at signs posted outside an entrance to Silicon Valley Bank in Santa Clara, California. From winemakers in California to startups across the Atlantic Ocean, companies are scrambling to figure out how to manage their finances after SVB Suddenly shut down. Photo / AP, Jeff Chiu
Keeping you up to date with the latest market moves, in association with Investment firm Jarden.
International
US
To no surprise, US markets were timid following events relating to SVB (Silicon Valley Bank), which began unfolding late last week and played out over the weekend as markets were closed.
Silicon Valley Bank experienced a sudden and significant withdrawal of client deposits of close to US$42 billion (NZ$67.5b) late last week following an announcement it would need to raise equity capital to continue operations.
Large scale clients moved against the bank after discovering the capital raise was required to cover a substantial unrealised loss on long term Treasury investments which went south against the rising interest rate environment of 2022 and early 2023.
SVB’s original collapse and freeze of client withdrawals sent shockwaves across not only the US, but global equity markets as equities, especially financials, were hit hard with investors worried other financial institutions may be susceptible to the same situation as SVB.
This contagion-like effect was also compounded by another bank, crypto-focused and New York based Signature Bank, being closed by regulators citing a “similar systemic risk exception”.
Smaller regional banks fell sharply, most notably First Republic Bank, which lost almost 64 per cent at one point during Monday’s trading, regardless of the fact the bank said it received additional liquidity from the Federal Reserve and JPMorgan Chase, taking just-in-case liquidity to close to US$70b.
Some respite was found in announcements from regulators in the US who have now backed the previously inaccessible deposits at both SVB and Signature Bank, with investors expected to be able to access their deposits today.
People look at signs posted outside an entrance to Silicon Valley Bank in Santa Clara, California. From winemakers in California to startups across the Atlantic Ocean, companies are scrambling to figure out how to manage their finances after SVB suddenly shut down. Photo / AP, Jeff Chiu
Other news amongst a sliding market came through part Kiwi-founded Allbirds, which lost another 8.4 per cent this morning following an abysmal day of trading last Friday.
Allbirds was listed as US$15 per share but is now trading at US $1.14 following a near 50 per cent fall on Friday in the wake of its half year result which also included the resignation of CFO Mike Bufano.
Ex All-Whites player and co-founder Tim Brown said the company would be re-focusing on the core brand strategy, while management acknowledged the period’s performance had been disappointing due to “both execution and macro challenges”.
Rest of the World
European markets were mixed as investors digested the fallout from the SVB capitulation.
News included HSBC announcing it would purchase the British arm of SVB for £1, with customer deposits also protected as part of the deal.
The New Zealand market dipped 0.5 per cent to land at 11,672 points.
Market outperformers against the run of play were Serko Limited, Port of Tauranga, and Mercury Energy which found 3.1, 1.8 and 1.6 per cent gains each. Conversely, the main decliners on the day were SkyCity and Heartland Group with roughly 4 per losses each, joined by Fletcher Building, down 2.4 per cent.
Stats NZ released food price inflation data for the month of February, with prices up 12 per cent in an annual basis, the biggest increase since September 1989.
Prices for fruit and vegetables were up 23 per cent despite some of the data not accounting for the Cyclone Gabrielle impacted Auckland and Hawke’s Bay regions. Renters however are experiencing a slightly different trend, with average NZ rents falling in February to land at just +2.1 per cent year on year (according to Stats NZ).
Australia
Similarly, the ASX200 was also in the red as multiple companies revealed exposure to SVB, namely, tech companies SiteMinder, Life360 and Pengana International Equities which confirmed 2 per cent of the company’s portfolio had been held at the bank.
As mentioned, later in the day it was confirmed that investments would be returned to depositors.
Understandably, the large cap ‘big four’ banks all traded lower, weighing down the index as ANZ, Commonwealth Bank, NAB and Westpac lost 1.9, 0.4, 1.6 and 1.4 per cent respectively.
In light of this, regulators in Australia highlighted SVB’s collapse as reason to justify Australia’s world leading and “unquestionably strong” equity capital requirements which are currently enforced on the aforementioned entities.
Other news included a breakthrough for biotech company Neuren (+18.5 per cent) who gained FDA approval for its drug, trofinetide, which treats certain neurological disorders.
Coming up today
The US consumer price inflation (CPI) print will be of main interest to investors. Closer to home, NAB and Westpac consumer confidence will feature.
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