The turmoil surrounding Silicon Valley Bank (SVB) also gripped Friday stock exchange trading in New York. The important lender for start-ups in the tech sector, among others, has run into financial problems due to the rapidly rising market interest rates.
The SVB Financial Group share continued the free fall in pre-market trading. Trading in the stock was then halted.
According to the Bloomberg news agency, several advisers have warned their customers to withdraw their money from the bank because SVB may no longer be able to meet its obligations. In addition, CNBC reports that the bank has been unable to raise money to prop up the financial situation. A sale would now be worked on, but that would be complicated by customers withdrawing their funds.
SVB saw 60 percent of the stock market value evaporate on Thursday after the bank announced it would have to issue new shares to improve its dire financial position. Many small banks, such as SVB, took out loans when interest rates were still meagre. Now that interest rates are rising sharply, they are in danger of getting into trouble and are having difficulty refinancing their loans.
The fear that the problems at SVB will spread to other larger banks also caused significant price losses in the European banking sector. The big four US banks Bank of America, Wells Fargo, JPMorgan Chase and Citigroup, which lost at least 5 percent on Thursday, fell to 4.2 percent.
In addition to the unrest in the banking sector, attention was focused on the US government’s jobs report. It showed more jobs were added in the United States in February than expected. A strong labour market gives the US central bank more room to raise interest rates sharply in the fight against inflation.
Shortly after the start of trading, the Dow Jones index was 0.5 percent lower at 32,106 points. The broad S&P 500 fell 0.9 percent to 3,883 points, and the tech exchange Nasdaq lost 1.4 percent to 11,183 points. The three leading indicators are heading for a significant weekly loss.
The vicissitudes surrounding the crypto bank Silvergate Capital also kept investors busy. That share rose almost 8 percent. On Thursday, Silvergate plummeted 42 percent after the company’s announcement to wind itself up. Crypto exchange Coinbase fell 8 percent. Bitcoin fell below $20,000 for the first time since January.