U.S. regional banks are not serious. Contrary to regulators’ wishes that the bankruptcy of First Republic, the 14th largest bank in the United States, and the takeover of JP Morgan will calm down the banking crisis, the market is shifting anxiety by finding another weak link.
On the 2nd (local time) in the US New York Stock Exchange, the regional bank stock index’KBW Regional Bank Index’ fell 5.5%, the lowest since the end of 2020. In particular, shares of Los Angeles-based bank PacWest, which fell more than 10% the previous day, plunged 27.8% again on the same day, and intraday trading was suspended for a while. Analysts say that the market has pointed to PacWest as a potential bank in crisis, following Silicon Valley Bank (SVB) and First Republic Bank. Pacwest’s stock price has plunged 44.74% in the past five days and 71.11% this year.
Other regional banks such as Metropolitan Bank (-20.45%), Western Alliance (-15.1%), Comerica (-12.4%) and Giants (-10.81%) also increased declines. Large banks also fell 1-3% one after another.
Chris Whalon, CEO of Whalen Global, a consulting and risk analysis firm, told the Financial Times (FT) that “the market is shifting its attention from weaker banks to weaker banks. said. The previous day, JP Morgan Chairman Jamie Dimon said, “This banking crisis is over,” but it means that investors and depositors are still anxious.
Amid concerns that the banking crisis could lead to an economic recession due to reduced credit supply, US labor indicators also suggested an economic slowdown. According to the Job Recruitment and Turnover Report (JOLTs) in March this year, the number of job openings for private companies was 9.59 million, the lowest since April 2021 in about two years. Morgan Stanley, a global investment bank that cut jobs once last year, announced an additional 3,000 job cuts.
As concerns about an economic recession grow, international oil prices plummet and the safe-haven gold price rises. On the same day, West Texas Intermediate (WTI) for May delivery fell 5.3% ($4) per barrel at the New York Mercantile Exchange, and Brent crude oil for July delivery on the London ICE Futures Exchange closed at $75.32 ($75.32), down 5% ($3.99) per barrel. On the other hand, gold for June delivery rose 1.6% per ounce on the New York Mercantile Exchange, recovering to the $2,000 level, reflecting the preference for safe assets.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.