Most of the Latin American stock markets closed with losses this Friday, as uncertainty remained regarding the health of the banking sector after the fall of Silicon Valley Bank (SVB), while the markets’ attention focused on the next meeting Federal Reserve monetary policy.
The collapse of SVB, the biggest failure of a US bank since Washington Mutual during the 2008 financial crisis, has hit bank shares and sparked concerns of contagion through global markets.
Meanwhile, the Fed would raise interest rates 25 basis points on March 22 despite recent turmoil in the banking sector, according to a strong majority of economists polled by Reuters, who were divided on the risks to their view of the terminal rate.
Market bets for the next meeting have been on a roller coaster, going from expecting a 50 basis point move after last week’s testimony from Fed Chairman Jerome Powell to pausing at one point in the aftermath of the bankruptcy. from some regional banks.
“After the volatility generated in the financial markets by the bankruptcy of Silicon Valley Bank and the problems of Credit Suisse, investors are waiting for the decision and the measures taken by the Federal Reserve on Wednesday, March 22,” said MetAnálisis in a note to your clients.
“The reality indicates that the situation of the local index can still get worse before it starts to improve,” said Portfolio Personal Inversiones. “The instability of the world’s largest economy is unlikely to end anytime soon. Even if the financial system were to gradually recover, (global) inflation is still a problem.”
In this context, the Chilean peso fell 0.49% to 831.30/831.60 per dollar and accumulated a weekly decline of 4.31%. Meanwhile, the leading index of the Santiago Stock Exchange, the IPSA, fell 1.64%, to 5,112.03 units.
“All week, markets have been in a state of hyper-sensitivity to bad bank news, following a series of US collapses and major concerns over Credit Suisse,” said Ricardo Evangelista, an analyst. Senior at ActivTrades.