On 10th March, the largest bank failure since the global financial crisis occurred in the US when Silicon Valley Bank, ranked 16 among the largest banks with $209 billion, went bankrupt. Signature Bank was closed a week later along with SVB Financial Group. The crisis came during a time when the global economy was still witnessing increasing uncertainty.
The Federal Reserve, the US Treasury Department, and Federal Deposit Insurance Corporation opted to guarantee all deposits at Silicon Valley Bank. Meanwhile, UBS agreed to buy Credit Suisse Bank for 3 billion Swiss francs to secure financial stability and to avoid further conflict in the global banking services market.
Most importantly, the Federal Reserve will pump close to $2 trillion into the banking system in order to support liquidity in financial institutions and avoid their collapse.
Five major central banks (the Swiss National Bank, the European Central Bank, the Bank of England, the Bank of Canada and the Bank of Japan) have also moved to increase credit in order to enhance the stability of the global banking system.
The impact of the crisis on major stock indices has been considered temporary, especially since the response of major central banks to inject liquidity into the market and regain stability.
Prices are still in a state of evaluation while investors await key decisions from the US Federal Reserve in the upcoming period.
The Federal Reserve finds itself in a difficult spot due to two conflicting problems. The first is how the Fed deals with their primary goal of lowering inflation with interest rate hikes, while simultaneously keeping rates low enough to preserve the US banking system.
The Nasdaq 100 index is highly sensitive to changes in interest rates. From a technical perspective, levels close to 12,900 act as important resistance levels (Figure 1). We will monitor its price movements in the upcoming period, seeing how the Nasdaq 100 deals with these levels and whether it can break above them.
Figure 1: US100, Medium-Long Term, MetaTrader, CFI Financial
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