On Monday, the Dax extended its losses from last week. The banking sector remains a concern for investors. The possible consequences of the collapse of Silicon Valley Bank (SVB) in the USA are currently being weighed, said a stock market expert. Shortly after the start of trading, the German benchmark index fell by 0.9 percent to 15,289 points on Monday. The M-Dax lost 0.9 percent to 27,759 points. The leading eurozone index EuroStoxx 50 fell by 1.0 percent to 4187 points.
Deutsche Bank's share price fell by another 1.5 percent after losing a good 7 percent on Friday. Commerzbank's shares fell by 3.6 percent after a minus of 2.6 percent on Friday. Although US regulators intervened in parts of the US banking sector due to turbulence, uncertainty remains. Before the weekend, SVB, which specialises in start-up financing, was temporarily closed and placed under state control after a failed emergency capital increase.
At the weekend, the Ministry of Finance, the central bank and the deposit insurance authority had declared that deposits with the SVB and another institution would be protected. The US Federal Reserve also launched a new lending program to provide banks with liquidity.
Economists at US bank Goldman Sachs, led by Jan Hatzius, also expect recent events in the US banking system to prompt the Fed to pause its monetary tightening cycle next week. They also referred to the uncertainty about further interest rate hikes in the coming months. Concerns about the US banking system also pushed Japanese stock markets into the red on Monday. The Tokyo Nikkei index, which comprises 225 stocks, closed 1.1 percent lower at 27,833 points. The broader Topix index fell by 1.5 percent to 2001 points.
However, the protection of all deposits by the US Federal Reserve, the FDIC protection fund and the Treasury should stabilize investors over the long term, analysts said. "Stocks are likely to return to previous levels by Tuesday," said strategist Kazuo Kamitani of Japanese investment bank Nomura.