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LONDON (Reuters) – U.S. regulators backed First Citizens BankShares’ takeover of Silicon Valley Bank, which eased some recent concerns about the health of the banking sector, the world’s largest bank said on Tuesday. stock market rose and the dollar weakened.
U.S. banking regulators said on Monday that the financial system as a whole is doing well after the recent bank failures, but they plan to tell Congress they will comprehensively review policies to prevent future collapses.
With a little more stability returning to the banking sector, investors were confident enough to abandon some of their recent safe-haven purchases.
The MSCI All World Index (.MIWD00000PUS), which has fallen 0.1% so far in March, is up 0.2%. European equities (.STOXX) were flat on the day.
US stock futures S&P 500 e-minis were flat, suggesting benchmark indices may not build on Monday’s opening bell gains.
Concerns have not disappeared. Federal Reserve Governor Philip Jefferson said on Monday that stress in small banks could hit small businesses the hardest.
Not only that, extreme market volatility has forced many investors to close their positions, taking advantage of some of these large price movements, known as mean-reverting trades, to reduce these swings. encouraged other investors to bet on
According to Mark Ostwald, chief global economist at ADM Investor Services, this means much of the confidence that appears to be returning to the market may not be based much on other than technical factors. To do.
“Maybe not until the end of the month, maybe after the Easter break, until we find out how much the rebound in hit banking stocks and risk assets has to do with these end-of-quarter flows, short-covering, and reverting to the mean. It’s not a pure feeling that the worst is over for the banking sector, we’re halting trading.”
Stress within and outside the banking sector is clouding the picture of monetary policy. Even as inflation subsides, it is difficult for investors to understand how central banks will balance the need to maintain price stability with the need to keep markets running smoothly. .
Analysts at Goldman Sachs said tightening credit terms to help contain inflation would create headwinds for the economy but would not derail it.
“We do not believe this will be a hurricane that will push the economy into recession and force the Fed to ease aggressively,” he said.
US Treasury yields edged higher, reflecting some relief that problems in the banking sector could be contained.
The benchmark 10-year yield increased by 2 basis points to 3.552% and the 2-year yield increased by 6 basis points to 4.019%, while the benchmark 10-year yield rose 6 basis points to 4.019%, while the benchmark 10-year yield rose to a nearly 16-year high on March 8. It’s still a long way from 5.084%.
Crude oil prices extended some of the previous day’s gains. Brent crude rose 0.5% to $78.53 a barrel and US futures rose 0.6% to $73.21.
Crude oil prices rose by more than $3 on Monday as concerns over oil supplies increased after some exports from Iraq’s Kurdistan region were halted.
Gold softened as investors posted gains of over $2,000 an ounce on last week’s rally. The gold spot last fell 0.2% to $1,953 an ounce.
Edited by Sam Holmes and Giles Elgood
Our standards: Thomson Reuters Trust Principles.
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