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July 16th 2024, 3:14:40 pm

(about a few seconds ago)

US bank jitters hit stock markets.

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The North American equity markets had a rough week following the robust comments from the US Fed officials on faster interest rate increases ahead, coupled with the Silicon Valley Bank failure pushing the banking sector down. S&P 500 and Nasdaq lost 4.58% and 4.71% while Canada’s S&P/TSX declined 3.97% during the week.

As markets were hoping the US central bank would pause hiking interest rates which are already at record highs, Fed Chair, Jerome Powel, reiterates early in the week that the rates should be increased faster, evaporating all the hopes. The stock markets soon reacted negatively.

Bank of Canada, however, held the rates unchanged at 4.5%, falling 0.25% behind the US, which remains to be seen how long holds if the US continues with its tightening cycle.

Following its dual mandate, the US central bank is looking to bring the inflation back down to 2% even if it means cracks in the economy in the short term. The Silicon Valley Bank could be the first sign of financial institutions going under in the US. Although, experts believe SVB’s failure is unlikely to go spiral and pose any systemic risk to the US financial system.

Still there might be more signs of cracks in the near future.