The crisis in parts of the US banking sector also left its mark on the German stock market at the beginning of the week. The German leading index Dax fell by several hundred points on Monday morning and slipped below the 15,000 point mark. Recently, the stock market barometer struggled a little and was still a good two and a half percent down at 15,033 points. For the still young stock market year 2023, there is still an increase of a good eight percent.
Reason for the currently bad mood: In the USA, the US money house Silicon Valley Bank, which specializes in start-up financing, was temporarily closed after a failed emergency capital increase and placed under state control. The SVB, founded in 1983, had seen immense withdrawals of funds in the days before as a result of liquidity concerns.
Over the weekend, the Treasury Department, the Federal Reserve and the deposit insurance agency in the United States had declared that deposits at the SVB and at another institution would be protected. The US Federal Reserve also launched a new loan program to provide banks with liquidity.
The overnight rescue operation for the SVB awakens bad memories of the 2008 financial crisis, explained analyst Jochen Stanzl from the trading house CMC Markets. The US government is trying to isolate the crisis and avoid toxic contagion effects. However, it is far from certain that this will work. "The market assumes that the problems that have become visible at the SVB are also in other balance sheets, including those of the really big ones."
However, the world is different today than it was then, wrote foreign exchange market expert Ulrich Leuchtmann from Commerzbank in a market commentary. "Politicians, central banks and financial market participants have learned. In particular, instruments exist today to contain such crises. They only had to be created in 2008 and afterwards. And because they didn't exist then, the contagion effects were higher then than they should be today."
With the current price losses, the Dax is now back at the level of mid-January. In October, the leading index started to recover from a level of less than 12,000 points and continued the rally at the beginning of 2023. There were signs that the economy was coping better than feared with the central bank's interest rate hikes, which were necessary due to the high level of inflation. The problems in the US banking sector have cracked this view.