Investors reacted to the shutdown of US banks Silicon Valley and Signature by taking refuge in bonds, precious metals and cryptocurrencies, against the backdrop of the special measures put forward by the US government and the speech reassuring Monday morning from President Joe Biden.
On the stock market side, the main indices yoyoed for much of Monday’s session, oscillating between red and green.
The banking sector has been damaged. The value of some regional banks has plummeted. This was the case for the First Republic of San Francisco, which lost 62% of its value on Monday. Other regional institutions, the PacWests, Western Alliance and Zion, suffered stock price declines of at least 20%.
President Biden indicated on Monday that the state was not going to come to the aid of shareholders and investors of distressed banks, unlike what happened during the financial crisis of 2008-2010. Over the weekend, concerted action by US authorities resulted in measures aimed at reassuring bank depositors.
For their part, GAFAM technology stocks gained between 0.5 and 3% on Monday.
Yields on 2-year bonds, securities that reflect expectations for future interest rates, fell more than half a percentage point to end the session slightly above 4%. On March 8, the 2-year rate was over 5%. It was its biggest three-day drop (almost 100 points) since the Black Monday stock market crash in 1987, according to Reuters.
The yield on the 10-year US government bond fell 15 basis points to 3.54%.
Gold gained $45 on Monday to end at US$1,913 per troy ounce, a five-week high, according to gold mining site Kitco News. Silver gained US$1.21, to US$21.76.
Oil lost its feathers on fears that trouble in the banking world would trigger the dreaded recession. The US dollar also lost ground against the major currencies. The Canadian dollar thus gained half a cent.
Cryptocurrencies had the best day. Speculators, who had sold short on Friday on the prospect of plummeting prices of risky assets, were caught quickly closing their positions when US authorities announced over the weekend that they would repay all deposits from two troubled banks.
Bitcoin appreciated nearly US$3,000 to US$24,241, a gain of more than 13%. Ethereum rose 7.5% to US$1680.