All eyes will remain on the US this week to see what authorities do to ensure further confidence in the banking sector.Credit:AP
“The market is suspicious,or wary is maybe a better way to put it,that there are more problems out there that have come forth,” said Joseph Trevisani,a senior analyst at FXstreet.com. “It takes time. It’s going to have to be weeks without any problems in the banking system before markets will be convinced that it’s not a systemic problem.”
But banking analysts have been quick to stress the difference between Deutsche Bank andCredit Suisse,which was rescued by its bigger rival UBS,arguing the German institution had solid fundamentals and is profitable.
Global investors are now watching for signs the US authorities will step in to guarantee more support for the banking sector following the collapse ofSilicon Valley Bank and Signature Bank earlier this month.
A key concern for investors is whether the Federal Deposit Insurance Corporation’s (FDIC) will guarantee bank deposits at all banks,which US Treasury Secretary Janet Yellen stopped short of promising late last week,rather than just for “systematically important” banks.
‘The markets[are] actually moving on daily headlines at the moment.’
Shaun Weick,senior investment analyst at Wilson Asset Management
Treasury Secretary Janet Yellen has said that in cases where the government sees a risk to the overall system,it will guarantee deposits for bank customers,even those with more than the $250,000 insured by the FDIC,which is what regulators did for both Silicon Valley Bank and Signature Bank.
But investors are now worried about whether regional banks face a looming liquidity crisis as people and businesses with deposit balances look to shift their money into bigger banks like JP Morgan that are “too big to fail”. Focus will also remain on what central banks do with interest rates from here as the prospect of future hikes fuels deepening concerns of an impending recession.