The bankruptcy of the regional bank Silicon Valley Bank has become a veritable black swan hitting the markets on a tumultuous start to the year. This Monday, major Wall Street indexes have started trading in the red: the Dow Jones Industrials, down 0.53%. This dragged down New York-listed Argentine stocks, which opened the day down as much as 4.3%.
Global investors analyze the “contagion effect” that the fall of the SVB could have in the US banking system, even after that country’s president, Joe Biden, promised to back up his clients’ deposits. The crisis also affects debt markets and increases risk aversion.
“Regulators in the US have come out to bail out depositors from financial institutions that need to be absorbed and/or liquidated. The injection of funds this action will require will have future consequences that policy makers face,” they said in a report for its clients at the consulting firm Aurum Valores.
“The lesser evil was chosen to avoid contagion and bullfighting. The first effects are a sharp drop in interest rate hike expectations and a weakening of the dollar. We maintain the cautionary advice,” they added.
In this context, heArgentine bonds start another week lower. The country’s debt securities are hit harder than those of its emerging peers: on average, local bonds drop more than 4%while those of neighboring countries, such as Brazil, Uruguay and Chile, started the week positively.
From the beginning of the wheel, Country risk, the indicator measured by the JP Morgan bank, rises by more than 10% to 2,444 pointsa figure he hadn’t seen since August last year, close to the arrival of Sergio Massa at the Palacio de Hacienda.
“On the market, it would appear that they combine: risk aversion, very poor trading and target revision interpreted as something very negative to have a very punishing start to the week,” they added to Aurum.
NS
Source: Clarin
