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While the benchmark index took a decent hit of 0.93% to 17,589.6 on Thursday, today’s session also seems to be a painful one for investors. The SGX Nifty is currently trading 0.93% or 163 points down at 17,455, by 8:29 AM IST, reflecting the probability of a big gap-down opening on Friday.
Yesterday, US jobless claims data came out at 211K which was higher than the forecast of 195K, a bad sign for the economy. However, currently, the bad news is the good news as more job losses would signal the US Fed to slow down the pace of rate hikes which is what the world wants to see. The initial reaction of was quite positive as it jumped over 200 points and the entire US market started trading in the green zone.
Image Description: Daily chart of SVB Financial Group with volume bars at the bottom
Image Source: Investing.com
However, one out-of-syllabus event occurred in the US which jittered market participants and outweighed US jobless claims data. SVB Financial Group (NASDAQ:), the holding company for Silicon Valley Bank (SVB) in the US which has high exposure in the startup space sold off a whopping US$21 billion worth of available-for-sale securities which would result in a post-tax loss of US$1.8billion. Now the bank is looking to raise US$2.25 billion to more than offset the losses in its quest for recapitalization.
As the US Fed is going all guns blazing to curb inflation by raising interest rates, the bond prices have been tumbling for a long time now which resulted in high MTM losses on the bond portfolio. The bank also quoted ‘elevated cash burn from clients’ as a reason for capital raising. The magnitude of the turmoil in which the bank is can be gauged by the fact that the share price of SVB Financial Group cracked 60.4% ‘intraday’, closing at US$106.04 on Thursday.
As the world was focusing on the jobless claims data and trying to project the US Fed’s next move, this new development has given the market participants another issue to worry about. The ripple effect has been seen on the Indian market with a steep cut of 0.93% on the SGX Nifty.
Read More on Nifty 50: Nifty 50: Resistance Shifts to 17,800, Downtrend Continues!
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