US stock futures rise after regulators move to limit Silicon Valley Bank fall
U.S. stock futures rose and the dollar fell in Asian trade on Monday after regulators bolstered the banking system and said depositors of collapsed tech lender Silicon Valley Bank would be repaid in full.
The US Federal Reserve on Sunday announced emergency funding measures to ensure “banks are able to meet the needs of all their depositors” following the second largest bank failure in US history.
Futures markets sent the benchmark S&P 500 up 1.7 percent and the Nasdaq 100 up 1.8 percent.
European futures were also higher, Euro Stoxx 50 contracts rose by 0.4 percent. Futures markets are relatively illiquid and sensitive to changes in news and sentiment.
During morning trading, the dollar fell 0.8 percent against the other currency baskets. The pound rose 0.8 percent to $1.212.
Asian stocks were mixed. Japan’s Topix was down 2 percent at midday after dropping 1.5 percent in the first 10 minutes of trading.
Among the Japanese companies most exposed to the unfolding crisis, SoftBank’s shares fell 2.2 percent.
“So far it’s looking like a regular bad day for Tokyo. Nothing crazy, but clearly the appetite for risk is low and things could take a turn for the worse at any minute,” said a Tokyo-based broker.
US regulators shut down SVB, a key financial institution for start-ups, on Friday after customers withdrew $42 billion – a quarter of all deposits – in a single day.
The Fed announced a new lending facility over the weekend as part of efforts by regulators, including Treasury Secretary Janet Yellen, to avoid spillovers through the financial system.
SVB also played an important role in financing start-ups in China’s dollar-based ecosystem, according to industry insiders, as companies kept money in the bank before moving it onshore to China.
Hong Kong’s Hang Seng index rose by 2 percent and mainland China’s CSI 300 rose by 0.9 percent on Monday.
At the annual session of parliament on Sunday, Beijing announced that it would keep the head of the central bank and the finance minister in their posts. China’s credit growth in February was also higher than expected, which strengthened hopes for an economic recovery.
Shanghai Pudong Development Bank, which has a stake in a joint venture with the Chinese arm of Silicon Valley Bank, lost 1.1 percent.
One major Tokyo-based fund manager said the perception this week was that the SVB decision may have eased fears of a domino effect.
But another Tokyo trader said even though U.S. futures were now rising, traders remained cautious as investors locked in gains from the previous five sessions and braced for more news.
The yield on the 10-year US Treasury rose by 0.01 percentage point to 3.704 percent, while the yield on the two-year bond decreased by 0.15 percentage point to 4.435 percent. Yields vary inversely with price.
Bitcoin, the world’s largest cryptocurrency by market capitalization, gained 9.1 percent to $22,283.42.