Subscribe
Be the first with the news that moves the market- Canada’s main stock index fell at opening as investors took a more conservative position on banking shares
- The collapse of Silicon Valley Bank (SVB) weighed on the financial sector, while energy stocks fell on lower oil prices
- SVB revealed its losses on Wednesday which caused panic in the tech industry, ultimately resulting in a bank run
- The Toronto Stock Exchange’s S&P/TSX composite index (.GSPTSE) was down 165.02 points, or 0.8 per cent, at 19609.90 in early morning trading
Canada’s main stock index fell at opening as investors took a more conservative position on banking shares.
The collapse of Silicon Valley Bank (SVB) weighed on the financial sector, while energy stocks fell on lower oil prices. However, gains in gold miners helped offset some of those declines.
U.S. authorities on Sunday launched emergency measures to boost confidence in the banking system after the failure of SVB threatened to trigger a broader financial crisis. Meanwhile, the Canadian banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), said it was taking temporary control of SVB’s unit in the country.
What happened to SVB?
Silicon Valley Bank, a financial institution, is deeply connected with technology startups and venture capital. Its collapse was led by the downturn of technology stocks, the Federal Reserve’s interest rate hikes, and large amounts of deposits.
SVB revealed its losses on Wednesday which caused panic in the tech industry, ultimately resulting in a bank run. On Friday, the Federal Deposit Insurance Corporation announced that it would take over the institution and is leading an auction to find a potential buyer.
Meanwhile, U.S. Treasury Secretary, Janet Yellen, ruled out a bailout from the federal government. She said the government, however, will step in to help depositors in some capacity. Yellen affirmed that the banking system was “really safe and well-capitalized”, as well as “resilient.”
TSX opening
The Toronto Stock Exchange’s S&P/TSX composite index (.GSPTSE) was down 165.02 points, or 0.8 per cent, at 19609.90 in early morning trading, after falling as low as 19,427.53, the lowest since Jan. 5.
The financials group (.SPTTFS) was down 2.5 per cent in the early morning trading session. Energy stocks (.SPTTEN) were down 4.9 per cent, and industrials (.GSPTTIN) were down 1.1 per cent.
The materials group, which includes precious and base metals miners and fertilizer companies, was the best performing at the start of the day, up 1.8 per cent.
