Berliner Boersenzeitung - Markets tumble as bank worries spread from Wall Street

The sell-off comes as traders nervously await the release of US jobs data later in the day, with many fearing a forecast-beating figure could press the Federal Reserve to ramp up borrowing costs more than previously thought.

US lenders were sent into a tailspin Thursday after SVB Financial Group, which specialises in venture-capital financing, announced a stock offering and offloaded securities to raise much-needed cash as it struggles with falling deposits.

The firm's shares collapsed 60 percent in New York as it said it lost $1.8 billion following the sales.

In a bid to prevent a run on the bank, SVB CEO Greg Becker asked clients to stay calm during a conference call Thursday, Bloomberg News reported, citing someone familiar with the matter.

The news came as crypto banking giant Silvergate said it planned to close as the sector faces more turmoil.

Major US banks suffered hefty losses, with Wall Street titans including JP Morgan, Bank of America, Wells Fargo and Citigroup all deep in the red.

Data showing more people than expected made jobless claims last week -- indicating a softening of the labour market -- was unable to soothe investor worries, and all three main indexes were deep in the red by the close of trade in New York.

US Treasury yields sank as investors flocked to the safety of government bonds.

While higher borrowing costs can be beneficial for banks, many that took out loans and made other investments during the period of ultra-low rates have seen their value erased as the Fed tightens monetary policy to fight inflation.

Lenders are also struggling to keep customers and so offer better rates, or sell assets at a discount, putting pressure on the smaller banks.

"We have been in a zero-interest regime for a multiyear period and banks have operated in a certain way," said Jens Nordvig, of Exante Data and Market Reader.

"Certain banks are going to have difficulty in a totally different environment."

- Eyes on US jobs -

And SPI Asset Management's Stephen Innes said: "In days like this, 'bad news is indeed bad news', especially when the potential of massive mortgage defaults enters the market purview.

"Even the swelling jobless ranks offered little relief to nervous investors. Traders draw a straight line from bulging jobless ranks to mortgage defaults and rotate into safety."

He offered a word of warning about the outlook, adding: "Provided (the Fed) are prepared to use their most blunt tool, higher for longer interest rates, it will be challenging to express a lasting 'risk-on view', given that the choppy policy waters may not offer as plain sailing as it was at the beginning of the year."

Asian markets were well down, with banks taking a hit.

HSBC lost more than three percent in Hong Kong, National Australia Bank sank three percent in Sydney, while Tokyo-listed Mitsubishi UFJ Financial Group gave up more than six percent.

Hong Kong's Hang Seng Index fell three percent -- wiping out all the year's gains -- while Sydney shed more than two percent.

Tokyo, Shanghai, Singapore, Seoul, Taipei and Mumbai were off more than one percent, while there were also losses in Jakarta, Bangkok, Manila and Wellington.

In early European business, Deutsche Bank and BNP Paribas fell more than five percent apiece, while Lloyds sank four percent.

London opened sharply lower even as data showed the UK economy rebounded in January to grow 0.3 percent, having narrowly avoided a recession in the last quarter of 2022. Paris and Frankfurt were also sharply down.

And there is a fear of further big losses if the US jobs report comes in above expectations later Friday after Fed boss Jerome Powell warned officials were ready to hike rates even more if data showed the economy remained robust.

"With all the panic around the banking system, if the job report is good, that's not good for markets," Shana Sissel, of Banrion Capital Management, told Bloomberg Radio.

The Fed would "kind of have to stay with the policy that they've been communicating", she added.

On currency markets, the yen weakened as the Bank of Japan decided against making any changes to its ultra-loose monetary policy, after boss Haruhiko Kuroda's final meeting.

The Japanese unit briefly eased to around 137 per dollar -- from 136 before the announcement -- before strengthening a little.

- Key figures around 0820 GMT -

Tokyo - Nikkei 225: DOWN 1.7 percent at 28,143.97 (close)

Hong Kong - Hang Seng Index: DOWN 3.0 percent at 19,319.92 (close)

Shanghai - Composite: DOWN 1.4 percent at 3,230.08 (close)

London - FTSE 100: DOWN 1.4 percent at 7,769.49

Euro/dollar: UP at $1.0590 from $1.0586 on Wednesday

Pound/dollar: UP at $1.1944 from $1.1922

Euro/pound: DOWN at 88.61 pence from 88.77 pence

Dollar/yen: UP at 136.25 yen from 136.15 yen

West Texas Intermediate: DOWN 0.9 percent at $75.02 per barrel

Brent North Sea crude: DOWN 0.6 percent at $81.11 per barrel

New York - Dow: DOWN 1.7 percent at 32,254.86 (close)

(P.Werner--BBZ)