# Stocks rise after bank sale fuels investor risk appetite
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-28
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Stocks Rise, Dollar Eases After First Citizens BancShares
Meta Description: Discover how global stocks rose and the dollar eased as U.S. regulators back a deal for First Citizens BancShares to purchase Silicon Valley Bank.
URL: https://financedigest.com/stocks-rise-after-bank-sale-fuels-investor-risk-appetitehtml

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By Amanda Cooper

LONDON (Reuters) -Global stocks rose and the dollar eased on Tuesday, after a deal backed by the U.S. [regulator for First Citizens BancShares to buy up Silicon Valley Bank](https://www.financedigest.com/exclusive-u-s-regulator-seeks-sale-of-silicon-valley-bank-signature-bank-portfolios-sources.html "Exclusive-U.S. regulator seeks sale of Silicon Valley Bank, Signature Bank portfolios-sources") soothed some of the recent concern about the health of the banking sector.

U.S. banking regulators said on Monday they planned to tell Congress that the overall [financial](https://www.financedigest.com/financial-crime-is-the-chink-in-the-banks-armour.html "Financial crime is the chink in the banks’ armour") system remains on a solid footing after recent bank failures, but will comprehensively review their policies in a bid to prevent future collapses.

With a little more [stability returning to the banking](https://www.financedigest.com/banking-stability-worries-go-behind-closed-doors-at-imf-world-bank-meetings.html "Banking stability worries go behind closed doors at IMF-World Bank meetings") sector, investors felt confident enough to ditch some of their recent safe-haven purchases, meaning the price of bonds and gold edged lower, as did the dollar.

The MSCI All-World index, which is showing a loss of 0.1% so far in March, was up 0.2%. [European shares](https://www.financedigest.com/european-shares-hit-nine-month-high-dollar-wobbles-after-powell-remarks.html "European shares hit nine month high, dollar wobbles after Powell remarks") were flat on the day.

U.S. stock futures, the S&P 500 e-minis, were flat, suggesting the benchmark index might not build on Monday’s [gains at the opening](https://www.financedigest.com/asia-shares-bank-on-eventual-china-opening-oil-gains.html "Asia shares bank on eventual China opening; oil gains") bell later.

The concern hasn’t evaporated. Federal Reserve Governor Philip Jefferson said on Monday that stress among small banks could [hit small businesses hardest](https://www.financedigest.com/digital-divide-hits-rural-black-americans-hardest.html "‘Digital divide’ hits rural Black Americans hardest").

Not only that, the extreme [market volatility has forced a lot of investors](https://www.financedigest.com/oil-markets-steady-as-investors-weigh-banking-crisis-russia.html "Oil markets steady as investors weigh banking crisis, Russia") to close positions, and prompted others to capitalise on some of those big price moves by betting those swings will die down, known as mean reversion trading.

This means that a lot of the confidence that appears to have returned to the markets might not be built on much other than technical factors, according to Marc Ostwald, [chief global](https://www.financedigest.com/global-economic-crisis-strangling-progress-for-poor-warns-u-n-development-chief.html "Global economic crisis strangling progress for poor, warns U.N. development chief") economist for ADM Investor Services.

It may not be until after month-end, possibly even after the Easter break, until it comes clear how much of the rebound in battered [bank stocks and risk](https://www.financedigest.com/strategies-banks-use-to-manage-liquidity-risk.html "Strategies Banks Use to Manage Liquidity Risk") assets has been to do with those quarter-end flows, short covering and mean reversion trades, rather than a genuine sense that the worst has past for the banking sector,” he said.

The stress both in, and about, the [banking sector](https://www.financedigest.com/big-ecb-hike-adds-fuel-to-the-banking-sector-fire.html "Big ECB hike adds fuel to the banking sector fire") has clouded the picture for monetary policy. Even with inflation gradually subsiding, it’s harder for investors to see how central [banks might balance the need to anchor price stability with the need to keep markets](https://www.financedigest.com/in-a-rising-market-are-banking-outsourcers-pulling-their-weight.html "In a rising market, are banking outsourcers pulling their weight?") running smoothly.

Tighter credit conditions to help temper [inflation will provide a headwind to the economy](https://www.financedigest.com/slowdown-warnings-flash-for-uk-economy-as-inflation-surges.html "Slowdown warnings flash for UK economy as inflation surges"), but won’t derail it, analysts at Goldman Sachs said.

We do not [expect this to be a hurricane that pushes](https://www.financedigest.com/hawkish-ecb-comments-push-up-rate-hike-expectations.html "Hawkish ECB comments push up rate-hike expectations") the economy into recession and forces aggressive Fed easing,” they said in a note on Tuesday.

U.S. Treasury yields edged up, reflecting a degree of relief that the problems in the [banking sector](https://www.financedigest.com/sterling-rises-as-receding-bank-sector-worries-lift-sentiment.html "Sterling rises as receding bank sector worries lift sentiment") can be contained.

Benchmark 10-year yields rose 2 basis points to 3.552%, while two-year yields rose 6 bps to 4.019%, still some way off the almost 16-year high of 5.084% on March 8.

[Oil prices](https://www.financedigest.com/oil-prices-steady-as-news-of-saudi-russia-meeting-calms-investors.html "Oil prices steady as news of Saudi, Russia meeting calms investors") extended some of the previous day’s gains. Brent crude rose 0.5% to $78.53 a barrel, while U.S. futures rose 0.6% to $73.21.

[Crude prices rose more than $3 on Monday after a halt to some exports from Iraq’s Kurdistan region added to worries about oil](https://www.financedigest.com/oil-dips-after-fed-comments-us-crude-stock-build.html "Oil dips after Fed comments, US crude stock build") supplies.

Gold eased, as [investors booked profits](https://www.financedigest.com/aviva-boosts-investor-payouts-after-profit-beat.html "Aviva boosts investor payouts after profit beat") on last week’s rally above $2,000 an ounce. Spot gold was last down 0.2% at $1,953 an ounce.

(Editing by Sam Holmes and Giles Elgood)


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