US bank stock plunge spills over into European market, demand for dollar increases due to risk aversion | Reuters

[ロンドン/チューリヒ 10日 ロイター] – Demand for the dollar increased in the currency derivatives market on Monday, reaching the highest level since mid-December last year. The fall in US bank stocks the day before led to investor risk aversion.

Demand for the dollar in the currency derivatives market increased on Monday, reaching its highest level since mid-December. Photo taken in 2021 (2023 REUTERS/Murad Sezer)

The exchange on a euro/dollar basis (three months) temporarily fell 17 basis points (bp), its biggest negative since December 14. Minus 14 recently.

In European stock markets, major banks fell in line with US banks, with the bank stock index expected to fall for the biggest one-day decline since June last year.

The STOXX bank index also fell 4.2%, its biggest drop since early June.

Credit Suisse hit a new all-time low. UBS fell 4.7%.

Most major banks fell, with HSBC down 4.5% and Deutsche Bank down 7.9%.

Money is pouring into the bond market looking for a safe haven. Germany’s two-year bund yield fell 14 basis points to 3.14%. Yields on two-year US Treasuries fell 7 basis points to 4.83%.

In the US stock market on the 9th, the stock price of the US financial holding company SVB Financial Group plunged more than 62%. It came after it announced a $1.75 billion stock sale the day before to shore up its balance sheet and shed dwindling deposits from cash-strapped startups.

“Do SVB Financial’s problems apply to big banks, and if so, to what extent?

“Monetary and fiscal policies are moving from highly accommodative policies to tighter policies, and you will see these scenes along the way,” said James Athey, investment director at abrdn in London.