Swedish stock market crash after the banking collapse in the USA

Broad stock market fall after US bank collapse 

"Tsunami wave of nervousness"  

 

Of:  

 

Gustaf Larsson  

 

Published: Today 09.10 

  

Updated: Less than 2 hours ago  

 

The stock market falls.  

 

The broad decline of the Stockholm Stock Exchange comes after an American niche bank fell out of control on Thursday. 

 

- It is a clear indication that the tough times are really here, says economist Frida Bratt.  

 

The Stockholm Stock Exchange opens in the red on the last trading day of the week.  

 

Both the broad index OMXSPI and the large-cap list OMXS30 retreat by around 2.5 percent, at 10 o'clock. All major companies fall, and several major banks are among the biggest losers.  

 

Sweden thus turns its back on the USA, where the stock markets landed in the red during Thursday evening. Just as in Stockholm, the banks fell the most on the American stock exchanges, after the bank Silicon Valley Bank, SVB, plummeted 60 percent.  

 

"Tsunami wave of nervousness"  

 

The background is that the bank, which focuses on tech and startups, was forced to sell a large part of its bond holdings at a loss and raise new capital. 

 

- It caused the share to fall wildly and there has been concern as to whether the bank will completely collapse. This, in turn, simultaneously sent a tsunami wave of nervousness through the banking sector, above all in the United States. But we also see how Swedish banks fall on the stock market today, says Frida Bratt, savings economist at Nordnet. 

 

 

Frida Bratt, Nordnet. Photo: Lars Pehrson/SvD/TT  

 

Now there is concern that more American banks will suffer from similar problems. Even if SVB is a "small player", as Frida Bratt puts it. 

 

- Therefore, it is doubtful whether a player of that size can really trigger a kind of banking crisis in the USA, but concerns are created nonetheless. It's all a clear sign that now the tough times are really here, and such signals are always interpreted extra badly when everyone is already nervous.  

 

That SVB collapsed on the stock exchange was a billion-dollar blow to the pension company Alecta. According to Dagens Industri , the pension giant lost SEK 6.4 billion on Thursday evening after other banks were involved in the case.

 

US stock markets fell on Thursday evening. Photo: Richard Drew/AP  

 

Job figures worry the stock market  

 

There is another big worry cloud over the stock market this Friday. The jobs figure from the US that comes at 2:30 p.m. Swedish time. 

 

- We have already received indications that the American labor market continues to be strong. In this situation, paradoxically enough, it is not something the stock market wants to see, because it increases the risk that the American central bank will then have to cool down the economy with more interest rate increases than is in the expectations.  

 

A strong job figure can therefore cause the US central bank, the Fed, to raise interest rates more to prevent continued rapid inflation. 

 

- And it is hardly something that the stock market appreciates in a situation where it is instead hoped that the Fed will be done with the race to raise interest rates. However, this means that if we get a weak job figure, it may paradoxically mean a relief on the stock market later today. Good news is bad news for the stock market, right now, says Frida Bratt.