SVB Fall: Global equity markets and the US dollar are under pressure following the Silicon Valley Bank (SVB) crisis. In the past three sessions, the US dollar rate has pulled back from three-month highs as the dollar index slipped from around 106 levels to around 103 levels, while major benchmark indices in Wall Street gained up to 2 per cent in Friday’s session. Fell down However, gold rates today climbed to $1,880 an ounce, an increase of about $65 an ounce from Thursday’s level of $1,815. US bond yields have started rising again after failing to hold yields above 4 per cent.
According to Investment Experts, after the collapse of this SVB Signature Bank shutdown, bond yields, especially in Treasuries, are going to be hit hard. Although it is limited to the US bond market only, for Indian treasuries, which are regulated by the Reserve Bank of India, the crisis will have no effect. For, mutual fund investors, those Indians who invest in international and international hybrid fund The recent SVB and Signature will be affected by the bank collapse.
Similarly, in the forex market, those holding positions in dollar may face a beating as the US dollar has retreated substantially from 3-month highs in the last three days. The dollar index is currently at 103.523, which was close to 106 levels on Thursday. But, the biggest hit of this banking crisis in America will be on the IPO and the American equity market. He said the banks which have reported collapse in the last three days were major lenders to US-based startups. Hence, after the failure of these banks, the IPO market is expected to decline in the near term. equity market America will be under great stress.
US-IPO hit the market
On how this SVB crisis will impact equity markets across the world, Kartik Jhaveri, Director – Wealth at Transcend Consultants said, “SVB and Signature Bank used to lead startups and after the collapse of SVB and Signature Bank, the cash flow for startups Inflows will remain a challenge.US for the near term.This will have a bad impact on the US IPO market startup The plan to go for listing may postpone its public issue till a real picture comes in.”
Impact of SVB crisis on mutual funds
When asked about the impact of the SVB crisis on the mutual fund market, Karthik Jhaveri said, “Neither in the US nor in India will there be much impact on debt funds. However, for Indian mutual fund investors who have exposure to international mutual funds And investing in international hybrid mutual funds, this news is not good news. For mutual fund investors in the US, their equity mutual fund returns will be impacted for the short term, but for medium to long term investors, it will wait There is a situation of doing and seeing.”
Impact on US Dollar Rates
“The uncertainty about the SVB collapse is over banking system in America. Therefore, both the US economy and the US currency are expected to face investor anger in the near future. Hence, the US Dollar rates are expected to remain under pressure till some concrete road map is announced by the US administration.”
impact on bond market
On how bond market investors will be affected by this banking crisis, Manikaran Singhal, Founder, Goodmoneying.com said, “Indian bond investors need not worry about this banking crisis in the US. But, for US bond investors, Those who trade this crisis will have a negative impact on Treasuries. Therefore, those who deal in US Treasuries are advised to take a pause for about a week and assess the US bond market whether this sanctions king crisis How will it end in the next one week.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint. We advise investors to do due diligence with certified experts before making any investment decision.
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