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Futures up: Dow 0.31%, S&P 0.34%, Nasdaq 0.17%
March 27 (Reuters) - U.S. stock index futures edged
higher on Monday after a buyout deal for failed Silicon Valley
Bank's deposits and loans helped soothe some jitters around
severe stress in the banking sector.
First Citizens BancShares Inc said on Monday it
will acquire parts of Silicon Valley Bank , the collapse
of which earlier this month marked the largest bank failure
since the 2008 financial crisis, unleashing fears about a
liquidity crunch in the sector.
At 5:02 a.m. ET, Dow e-minis were up 102 points,
or 0.31%, S&P 500 e-minis were up 13.5 points, or 0.34%,
and Nasdaq 100 e-minis were up 21.5 points, or 0.17%.
Shares of First Citizens advanced about 11% in light
premarket trade, while First Republic Bank jumped nearly
27% after a report said U.S. authorities are considering more
support for banks, which could give the embattled regional
lender more time to shore up its balance sheet.
Other regional banks Western Alliance Bancorp and
PacWest Bancorp also climbed 5.4% and 9.2%,
respectively.
Shares of major U.S. banks JPMorgan Chase & Co ,
Citigroup and Bank of America advanced between
0.8% and 1.4%.
European bank shares also rebounded from declines last week
when a sharp jump in Deutsche Bank's credit default
swaps, a type of insurance for bondholders, had exacerbated
worries about the health of banks in the region.
While the Silicon Valley Bank deal has helped instill some
confidence in the banking sector's stability, concerns about a
bigger crisis have not abated completely, analysts said.
"Shunting parts of the failed bank off to a new owner may
give the regulator more capacity to deal with problems still
threatening to pop up elsewhere, particularly with U.S. regional
banks," said Susannah Streeter, head of money and markets,
Hargreaves Lansdown.
"The big worry is that they are sitting on big piles of
unrealised losses, not just in their bond portfolios but on
other assets that have been battered by the storm of high
interest rates."
With the banking sector stress threatening to snowball into
a bigger financial crisis and potentially causing a steep
economic downturn, traders have largely priced in a pause in the
Federal Reserve's rate hikes in May.
U.S. Treasury yields edged higher on Monday as some fears
about the banking sector eased.
Despite the turbulence in financial markets, all three major
Wall Street indexes logged gains last week, with the benchmark
S&P 500 and the Nasdaq on course for a quarterly
gain.
Investors are also awaiting a host of economic data this
week, including a consumer confidence reading and an inflation
report that could give more clues about the Fed's monetary
policy path.
(Reporting by Amruta Khandekar; Editing by Dhanya Ann Thoppil)
