FXCM’s US.BANKS basket declines on SVB loss

  • US.banks

SVB Sells Securities to Cover Loss

FXCM's USBANKS basket dropped yesterday. The basket was down around 9.6% for the day. Shares in JPMorgan Chase and Wells Fargo were down 5% and 6%, respectively.

The catalyst for the move was SVB Financial Group, the parent of Silicon Valley Bank. It sold securities from its portfolio to cover a $1.8bn loss. It has also announced plans to raise capital via a common and preferred share offer. Withdrawals, mainly from venture capital clients who need the liquidity, and higher interest rates have forced SVB to realign its portfolio.

SVB Financials' shares were down 60% on the day.

The news has traders taking a closer look at the banking sector for similar exposure. The first concern is how much are banks securities really worth if they are forced to sell. Second, can banks hold on to their deposits without raising rates for depositors, which would hurt margins.

Technical Analysis

US.BANKS has charted a higher trough (HT), followed by a higher peak (HP). This is a defined uptrend. Investors have moved into banks to take advantage of the rate hiking environment. Yesterday's 9.6% decline is marked by the blue arrow. The basket's RSI has slipped below 50 (green rectangle). The longer its stays on the bearish side of 50 the more pressure will be applied to US.BANKS.

The basket remains in uptrend until it falls below the previous higher trough (green line).

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.