On Tuesday, investors were rattled as a result of First Republic Bank’s staggering losses – the bank reported their deposits had plummeted by an eye-popping $100 billion in just three months. Consequently, shares tanked 49% on Wall Street.
Analysts predict a ‘very hard to come back from’ situation for the San Francisco-based regional lender, First Republic. Depositors pulled their funds in mass during Q1 of this year.
Worth noting, following two bank collapses – Silicon Valley Bank and Signature Bank of New York – big banks such as JPMorgan Chase stepped up with a $30 billion dollar rescue package for the collapsed financial institutions.
With fears that more small lenders will follow suit, Wall Street remains pessimistic about the prospect ahead for these beleaguered institutions through 2020.
First Republic revealed its first quarter results on Monday demonstrating a major shift in deposits. By the end of April, their total had dropped to $102.7 billion following Silicon Valley Bank’s failure on March 9th aided by large investments from JPMorgan Chase and other key banks over that period which helped stabilise things overall though still not at pre-March levels.
Bitcoin Price Updates
After a tumultuous week, the world of finance has seen two vastly different stories unfold: Bitcoin price’s stunning recovery above $28,000 despite seeing significant dips earlier in the week and First Republic Bank suffering an almost catastrophic 50% plunge.
It remains to be seen what will happen next as investors remain on edge around both events.
After Bitcoin’s impressive rally in Q1, analysts are wondering if it will again benefit from an economic downturn – with First Republic Bank being its catalyst this time around.
As markets fret over what may come next, investors worldwide watch closely for any hints about whether or not crypto has something to gain once again during these turbulent times.
As the First Republic Bank’s stock (FRC) plummeted by a staggering 93.32% since March, its closing price at $8.10 signified an unprecedented 50% collapse in just 24 hours leaving many relieved that they had diversified their portfolios with cryptocurrency as opposed to volatile stocks or bonds.
Currencies Updates
With fears of financial hardship looming, the US Dollar and Japanese Yen surged as markets responded to Republic Bank’s woes. In stark contrast, the Dow Jones plunged in reaction to the news.
Investor sentiment took a dive on Tuesday as fears of heightened volatility caused a stampede into the safety-conscious US Dollar and Japanese Yen.
The Dow Jones, S&P 500 and Nasdaq Composite all lost over 1% each while the market ‘fear gauge’ surged 11%.
Market jitters were further amplified by news that First Republic Bank (FRC) had experienced sizable deposit losses (-36%) year over year, leading to speculation they might be exploring sale options in risky asset classes worth $100b or more.
Uncertainty continues to abound even after these cautionary developments have set in motion among Wall Street players, resulting in an exodus from certain stock sectors which could prove disastrous for those unprepared for such movement if it should come about again soon.
Investors became increasingly wary amidst mixed signals in the markets today.
Sentiment-driven currencies such as AUD and NZD dropped against their major counterparts, while Treasuries saw a surge of buyers bidding up prices amid lower yields across the board.
Simultaneously, the tech sector experienced losses due to rising expectations surrounding dovish Fed monetary policy reminiscent of an early recession phase yet was buoyed somewhat by strong earnings from Microsoft and Alphabet near market close.
The US Dollar and sentiment could take a tumble in Asia-Pacific trading Wednesday as risk aversion persists.
Markets like the Nikkei 225 and ASX 200 may be hit hardest, while investors flock to safe haven currencies such as USD and JPY for protection – at least for now.
All eyes on Australia’s CPI report which will provide insight into AUD/USD activity over the coming days.
The US Dollar looks to be at a potential turning point, with the DXY Index indicating that it could make a major move in either direction.
After leaving behind another Bullish Engulfing candlestick pattern just above an essential support zone, the stage is set for both bullish reversal and further losses since late 2020.
It seems the result of this pivotal moment depends on whether or not prices break higher – only time will tell!
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