Silicon Valley Bank’s troubles seep into nervous global markets

European stocks slid over uncertainty regarding tightening central bank policy, and looming worries over the health of the US banking sector.

An overnight sell-off of US banking stocks, prompted by troubles at the tech-focused lender Silicon Valley Bank (SVB), has seeped into European markets. Trading in shares of SVB were halted on Friday after tumbling as much as 66 per cent earlier in premarket trading. The rout spread concern about hidden risks in the banking sector and its vulnerability to the rising cost of money.

Dublin

The Iseq index ended the week on a low note, losing more than 1 per cent by the end of the session as banking and building stocks weighed on the market.

Irish bank shares fell as the failure of troubled tech-lender SVB Financial Group’s efforts to raise capital through a stock sale rippled through global markets on Friday. AIB saw its stock dip just under 1 per cent to €3.82, while Bank of Ireland shed more than 2.8 per cent over the session, ending the week at €9.90. Permanent TSB saw its stock take a 4.2 per cent hit, dropping to €2.51.

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There were other casualties elsewhere on the Dublin market. Smurfit Kappa fell almost 3 per cent, while Kerry Group shed 2.16 per cent and Glanbia lost 1.3 per cent over the day. Building stocks also suffered, with Kingspan down 1.6 per cent to €63.62, and CRH was off the pace, clocking up a 1.55 per cent loss on its share price before the closing bell.

One of the few bright spots on the horizon was Paddy Power owner Flutter Entertainment, which added half a per cent to €159.25.

London

The FTSE 100 slipped 1.7 per cent, with banks dropping 4.6 per cent to an eight-week low. HSBC, Barclays, Lloyds and NatWest Group dropped between 4.3 per cent and 6 per cent.

Data that showed British economic output rose by a better-than-expected 0.3 per cent month-on-month in January bolstered bets that the Bank of England will raise interest rates again this month.

Among individual stocks, Amigo slumped 13.5 per cent after the sub-prime lender said it was struggling to secure the additional £45 million of capital from investors it had targeted as part of a court-approved rescue plan.

In a bright spot, FirstGroup rose 1.8 per cent after the transport operator said profit for its current financial year would come in above forecasts.

Berkeley Group Holdings added 0.1 per cent after the home builder maintained its 2023 outlook but said it was cautious as sales fall amid volatility in the property market.

Europe

The pan-European Stoxx 600 index closed the day 1.4 per cent lower and the week down 2.3 per cent, its steepest weekly fall so far this year.

Banks fell 3.8 per cent, the biggest one-day fall in nine months, as HSBC, Deutsche Bank, Barclays, Unicredit and Commerzbank dropped between 2.6 per cent and 7.4 per cent.

Credit Suisse’s shares hit a new record low and the financial services index dropped 2.8 per cent.

Among other notable movers on Friday, ASML Holding fell 1.3 per cent on uncertainty over the Dutch government’s new restrictions on chip technology exports to China. Software maker SAP eased 0.9 per cent after US rival Oracle narrowly missed quarterly revenue estimates.

Retailer Casino slid 5.6 per cent on a decline in fourth-quarter sales and profit, and Daimler Truck slumped 4.5 per cent on a results miss despite a positive outlook.

New York

All three main US stock indexes were lower, with the S&P and the Nasdaq on course to post their largest weekly losses since September.

The US economy added a more-than-expected 311,000 jobs last month, while the unemployment rate unexpectedly ticked higher, along with the labour market participation rate.

Hourly wage growth cooled on a monthly basis, but gained some heat year-on-year, albeit not as much as economists predicted.

– Additional reporting: Reuters, Bloomberg