ASX 200 bank shares are deep in the red on Thursday. Here’s why

A man sits uncomfortably at his laptop computer in an outdoor location at a table with trees in the background as he clutches the back of his neck with a wincing look on his face.

A man sits uncomfortably at his laptop computer in an outdoor location at a table with trees in the background as he clutches the back of his neck with a wincing look on his face.

S&P/ASX 200 Index (ASX: XJO) bank shares are taking a tumble today.

Here’s how the big four bank stocks are tracking during lunch hour on Thursday:

  • Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are down 1.72%
  • National Australia Bank Ltd (ASX: NAB) shares are down 0.76%
  • The Westpac Banking Corp (ASX: WBC) share price is down 1.43%
  • And Commonwealth Bank of Australia (ASX: CBA) shares are even after an earlier plunge

Now, it’s not just ASX 200 bank shares under pressure today.

The benchmark index is also down 1.41% at the time of writing, with the S&P/ASX 200 Financials Index (ASX: XFJ) dipping 0.75%.

So, what’s going on?

Why are ASX 200 bank shares out of favour today?

Financial shares the world over are catching turbulence as some of their international peers struggle with rapidly rising interest rates following a decade-long era of easy money.

Modest increases in interest rates can improve banks’ profitability by increasing their net interest margins.

But rapid rates can see their private and business customers struggle to make loan payments, increasing the level of defaults.

ASX 200 bank shares came under pressure earlier this week in the wake of the collapse of United States-based SVB Financial Group (NASDAQ: SIVB), or Silicon Valley Bank.

As depositors began to fear SVB was facing liquidity issues, the dreaded bank run ensued, and the bank was unable to meet the demand for withdrawals. The government stepped in to assure depositors will be fully covered, but shareholders were left holding the bag.

Shares in the now-defunct bank last traded on 9 March, a day they tanked by a gut-wrenching 60%.

Banking crisis leaps across the pond

In the latest development putting new pressure on ASX 200 bank shares, the contagion from SVB’s collapse appears to have spread to Europe.

Investors are now worried about the viability of Credit Suisse Group (SWX: CSGN). Fears were stoked after the Swiss-based bank’s largest investor, Saudi National Bank, said regulatory issues prevented it from providing additional funds.

Shares in Credit Suisse plummeted 24% on the SIX Swiss Exchange, hitting new record lows.

Commenting on the development, the head of institutional clients at Banca Ifigest in Milan, Carlo Franchini, said (quoted by Reuters), “Markets are wild. We move from the problems of American banks to those of European banks, first of all Credit Suisse. This is dragging lower the whole banking sector in Europe.”

As for what investors in ASX 200 bank shares can expect from the global banking sector over the coming weeks, we’ll likely just have to wait and see.

“It’s too early to know how widespread the damage is,” BlackRock chief executive Laurence Fink said (courtesy of The Australian Financial Review).

“The regulatory response has so far been swift, and decisive actions have helped stave off contagion risks. But markets remain on edge,” Fink added.


The post ASX 200 bank shares are deep in the red on Thursday. Here’s why appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the ‘five best ASX stocks’ for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now…

See The 5 Stocks
*Returns as of March 1 2023

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];[property] = defaultValue;

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

SVB Financial provides credit and banking services to The Motley Fool. Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended SVB Financial. The Motley Fool Australia has recommended SVB Financial and Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s