DAX, CAC, FTSE 100 – European Stocks Plunge Amid Banking Stock Sell-Off

Key Takeaways:

• European stocks experienced significant losses on Monday, with the pan-European STOXX 600 index falling 2.4%, marking its largest percentage decline since December 2022.
• European banking stocks dropped 5.7%, the worst two-day selloff since the Russia-Ukraine war broke out early last year.
• Investors are concerned about the sector’s balance sheet following the sudden collapse of Silicon Valley Bank (SVB).

European stocks experienced significant losses on Monday, with the pan-European STOXX 600 index falling 2.4%, marking its largest percentage decline since December 2022.

At 14:00 GMT, Germany’s Dax is trading at 14934.15, down 493.82, or -3.2%. France’s CAC 40 Index is at 6999.95, down 220.72 or -3.06 and the UK’s FTSE 100 is trading 7554.84, down 193.51 or -2.5%.

Worst Two-Day Sell-Off Since February 2022

This was due to the region’s banking stocks, automakers, and insurers, which were among the top decliners.

European banking stocks dropped 5.7%, the worst two-day selloff since the Russia-Ukraine war broke out early last year.

Concerns arose around the sector’s balance sheet following the sudden collapse of Silicon Valley Bank (SVB).

The European Central Bank (ECB) is not planning an emergency meeting of its banking supervisory board on Monday, according to a senior source.

Conditions Could Worsen

“Investors have still been shaken by the event of the past few days, and are waiting with bated breath to see if repercussions in the financial sector will spill over and create pools of fresh problems,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“There is an expectation that weaknesses remain in pockets of the system and the US Treasury may have to step in with further guarantees of deposits at other banks,” Streeter added.

European Stocks Getting Pounded

HSBC dropped 4.1% after announcing that it will acquire the UK subsidiary of SVB for 1 pound, rescuing a key lender for technology start-ups in Britain.

However, the wider risk-off moves sent Credit Suisse shares down 12.1% to a fresh record low, and Germany’s Commerzbank slumped 11.3%.

France’s Societe Generale and Spain’s Sabadell fell 6.2% and 9.4%, respectively. Novartis slipped 1.0% even as the Swiss company said it formally launched its new share buyback programme, where it could spend up to 10 billion Swiss francs ($10.90 billion) repurchasing its shares over the next three years.

Bank of England:  British Bank HSBC to Acquire Silicon Valley Bank UK

British bank HSBC will acquire Silicon Valley Bank UK Limited, according to a statement by the Bank of England, CNBC reported.

The Bank of England said the action was taken “to stabilise SVBUK, ensuring the continuity of banking services, minimising disruption to the UK technology sector and supporting confidence in the financial system.”

Silicon Valley Bank caused turmoil for the banking sector and markets more widely when it surprised investors on Wednesday with news it needed to raise $2.25 billion to shore up its balance sheet, and that it had sold all its bonds at a $1.8 billion loss.

The bank was then closed by regulators after customers withdrew $42 billion of deposits by the end of Thursday.

HSBC said it will buy SVBUK for £1.