ASX nosedive after multiple US banks collapse

Australian markets took a nosedive on Tuesday, after multiple banks collapsed in the United States.

The ASX has dropped sharply in early hours of trading on Tuesday, following the collapse of several banks in the United States.

The ASX200 opened down 114 points, or 1.6 per cent, on 6995 and after two hours of trade it had fallen two per cent further, wiping all gains made this calendar year.

All 11 market sectors have been dragged lower, with financials bearing the brunt, down 2.7 per cent as the big four banks all experienced falls.

The ASX tumbled by nearly two per cent on Tuesday.

But the uncertainty has pushed gold prices higher; the top 10 performers on the ASX200 as of 1pm Tuesday were precious metals producers, with investors flocking to the safety of gold.

Silver Lake Resources lead the charge, up 6.1 per cent.

The Aussie market is now down by 2% after close to 2 hours of trade on Tuesday. The #ASX200 is back in negative territory for the calendar year, down 1% in 2023. https://t.co/Qjd0ojbPCh

— CommSec (@CommSec) March 14, 2023

Silicon Valley Bank (SVB), Silvergate Capital and Signature Bank all collapsed late last week, prompting fears of a US recession.

Silvergate and Signature were known to be lenders to the cryptocurrency industry, while SVB failed when investors panicked and pulled their investments after they quickly lost value.

SVB’s shares were down 66 per cent just before California regulators shut the bank down on Friday.

Despite a nervous weekend, and a volatile session in US markets, the Dow Jones finished Monday’s trade session down just 0.3 per cent, and the S&P 500 down 0.2 per cent, as equity markets stabilised.

It follows the swift action of regulators, with Treasury Secretary Janet Yellen, Federal Reserve Board chair Jerome Powell and Federal Deposit Insurance Corporation (FDIC) chairman Martin Gruenberg ensuring depositors would be protected.

Originally published as ASX nosedive after multiple US banks collapse