Actual economic news
U.S. authorities launched emergency measures on Sunday to shore up confidence in the banking system after the failure of Silicon Valley Bank threatened to trigger a broader financial crisis.
After a dramatic weekend, regulators said the failed bank’s customers will have access to all their deposits starting Monday and set up a new facility to give banks access to emergency funds. The Federal Reserve also made it easier for banks to borrow from it in emergencies.
HSBC (LON:HSBA) has agreed with the Bank of England to buy the U.K. operations of Silicon Valley Bank (NASDAQ:SIVB) for one pound, following the collapse of its U.S. parent last week.
SVB, with $209 billion in assets, was the second-biggest bank failure in U.S. history, and its collapse last week sent shudders through the U.S. financial system. Over the weekend, the U.S. Treasury, Federal Reserve, and Federal Deposit Insurance Corporation had put together a bailout package that essentially protected all of Silicon Valley Bank's depositors, including those with assets above the federally-guaranteed $250,000 limit.
Amid the fallout from the biggest bank failure since the 2008 financial crisis investors will be focusing on U.S. inflation data in the coming week that will be a key test for markets already under pressure from worries over the Federal Reserve’s campaign to tame inflation. Elsewhere, the European Central Bank is expected to deliver another big rate hike, the U.K. is to announce its latest budget and China is to release a flurry of economic data. Here’s what you need to know to start your week.
U.S. authorities were preparing "material action" on Sunday to shore up deposits in Silicon Valley Bank (SVB) and try to stem any broader financial fallout from the sudden collapse of the tech startup-focused lender, sources familiar with the matter told Reuters.
Biden administration officials worked through the weekend to assess the impact of SVB Financial Group's Friday failure, with a particular eye on the venture capital sector and regional banks, the sources said.
Sterling rose on Friday after Britain's economy was shown to have grown by more than expected in January, further allaying fears of a recession, while mixed U.S. labour market data weakened the U.S. dollar.
The Office for National Statistics (ONS) said Britain's economy expanded 0.3% month-on-month, after a drop of 0.5% in December. A Reuters poll of economists had pointed to growth of 0.1%.
"At this stage, we are far from convinced that a technical recession in 2023 is the foregone conclusion that many in the market have made out," said Matthew Ryan, head of market strategy at Ebury.
UK GDP grew by 0.3% in January, beating the forecast of 0.1%. According to the ONS, the education and entertainment sectors strongly contributed to GDP growth.
In their fifties and deciding there was more to life than work, Liz and Ian Woodbridge quit stressful jobs during the pandemic - part of a cohort of British early retirees now resisting a government call to return, despite rising living costs.
For an array of reasons, including ill health, hundreds of thousands of older workers left their jobs during and after the societal disruptions of COVID-19, contributing to a chronic labour shortage that forecasters predict will drag on Britain's economic performance for years.
The relative wealth of many of the early retirees poses a challenge for finance minister Jeremy Hunt, who has said Britain needs them to leave "the golf course". Hunt is considering policies to encourage them back in the UK's March 15 budget.
The FTSE 100 is expected to open in negative territory on Thursday following a mixed showing in the US after Federal Reserve chair, Jerome Powell, completed his two day grilling to lawmakers in Washington.
Spread betting companies are calling the lead index down by around 18 points.
Ipek Ozkardeskaya at Swissquote Bank noted the “second day of testimony was as hawkish as the first one, with one little exception.”
“Powell added a very small tweak to his Tuesday language, and said that the data will determine whether the Fed would increase the pace of the interest rate hikes, BUT that ‘no decision has been made on this’ yet.”
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