Worries over the banking sector come as traders nervously await the release of key US jobs data
London (AFP) - A global stock markets selloff accelerated Friday with banks tumbling on contagion fears over the plight of troubled US lender SVB.
Asia and Europe mirrored a Wall Street rout before key US jobs data that could herald a quicker pace of Federal Reserve interest rate hikes.
Oil prices fell almost one percent and the dollar dropped against the pound and euro.
The yen weakened as the Bank of Japan decided against making any changes to its ultra-loose monetary policy at Governor Haruhiko Kuroda’s final meeting.
“As ever in this situation, we’re seeing a very defensive response until everyone has a better idea of what this ultimately means for the financial sector,” Craig Erlam, senior analyst at Oanda trading group, told AFP.
“It’s certainly stolen the spotlight from the jobs report later which was meant to be the primary event this week.”
Markets were rocked after SVB, which specialises in venture-capital financing, announced Thursday a stock offering and offloaded securities to raise much-needed cash as it struggles with falling deposits.
In reaction, the firm’s shares collapsed 60 percent in New York as it said it lost $1.8 billion following the sales.
In a bid to prevent a run on the bank, SVB CEO Greg Becker reportedly asked clients to stay calm.
Sentiment was further hit by this week’s collapse of crypto bank giant Silvergate.
Major US banks suffered hefty share-price losses, with JP Morgan, Bank of America, Wells Fargo and Citigroup deep in the red.
US Treasury yields sank as investors flocked to the safety of government bonds.
In London, shares in bank titan HSBC shed more than five percent around midday.
Peers Lloyds, NatWest and Standard Chartered each lost about four percent.
In the eurozone, Deutsche Bank tanked ten percent at one stage, while French lender Societe Generale slumped six percent.
“Negative momentum from last night’s sell-off on Wall Street has permeated across global markets,” noted Victoria Scholar, head of investment at Interactive Investor.
While higher interest rates can be beneficial for banks as customers pay back more for loans, lenders must contend also with higher charges on their own borrowings.
Banks are also having to offer competitive rates of interest to savers or risk losing them to rivals.
In Asia on Friday, Hong Kong’s stock market fell three percent and has now erased all its year-to-date gains.
- Key figures around 1115 GMT -
London - FTSE 100: DOWN 1.8 percent at 7,736.12 points
Frankfurt - DAX: DOWN 1.6 percent at 15,381.61
Paris - CAC 40: DOWN 1.5 percent at 7,207.96
EURO STOXX 50: DOWN 1.6 percent at 4,217.36
Tokyo - Nikkei 225: DOWN 1.7 percent at 28,143.97 (close)
Hong Kong - Hang Seng Index: DOWN 3.0 percent at 19,319.92 (close)
Shanghai - Composite: DOWN 1.4 percent at 3,230.08 (close)
New York - Dow: DOWN 1.7 percent at 32,254.86 (close)
Euro/dollar: UP at $1.0597 from $1.0581 on Thursday
Pound/dollar: UP at $1.1978 from $1.1925
Euro/pound: DOWN at 88.45 pence from 88.73 pence
Dollar/yen: UP at 136.83 yen from 136.15 yen
West Texas Intermediate: DOWN 0.9 percent at $75.03 per barrel
Brent North Sea crude: DOWN 0.8 percent at $80.93 per barrel