The FTSE 100 drops 2% in wake of SVB collapse

There were many sell-offs on Friday after SVB unveiled a $1.8bn loss in its bond portfolio and was placed into receivership. This eclipsed a positive employment report in the US. The FTSE 100 fell 1.7%.

The bank's closure comes after it was forced to raise capital after losing $1.8 billion selling its bond portfolio at a loss to meet demands for cash from depositors.

Investors now worry about the vulnerability of banks, fearing the same problems that led to the 2008 financial crisis. However, they’re now also assessing the possibility of the Fed may not raise interest rates at its next policy meeting on March 21-22.

The FTSE 100 was down 2.0% this morning amid uncertainty, weighed down by banking stocks.

HSBC said it will acquire the UK subsidiary of SVB for 1 pound, since it is an important lender for tech startups in Britain.

Meanwhile British American Tobacco dropped 2.7% after JP Morgan lowered its recommendation to "neutral" from "overweight".

 

Things to read today:

SVB’s Failure Exposes Lurking Systemic Risk of Tech’s Money Machine (Bloomberg)

Goldman Expects No Fed Rate Hike in March After SVB Collapse (Forbes)

Silicon Valley Bank: the spectacular unravelling of the tech industry’s banker (Financial Times)

Who killed Silicon Valley Bank? (WSJ)