Aurelia Butler

TORONTO (Reuters) – Last week’s sudden collapse of Silicon Valley Bank (SVB) could choke funding for Canada’s technology start-ups and place them in the hands of domestic lenders who may be more selective in financing new ventures, financiers told Reuters.That would be bad news for a sector that took a beating in 2022, which has made investors more risky averse in early stage investments.”I would say this is probably the worst possible time (for this to happen) in the last decade because of the tech pullback we’ve had,” said Neil Selfe, CEO at advisory INFOR Financial. SVB’s Canadian division, which received a license to operate in 2019, competed against other banks and private lenders to help finance the growth of the Canadian technology sector, before it collapsed on Friday. It had doubled its secured loans to C$435 million ($314 million) in 2022 from previous year.Canada had come to be known as the world’s second-biggest global tech hub in the world after Silicon Valley, Kim Furlong, CEO of Canadian Venture Capital and Private Equity Association told CBC News on Monday.Companies including Shopify (NYSE:SHOP) Inc were examples of Canada’s tech success story, which helped pull more investments into the sector.U.S. regulators stepped in on Sunday after the collapse of SVB, which had a run after a big bond portfolio hit.CIBC, Royal Bank of Canada and Bank of Montreal were the most likely to pick up both SVB’s current book, and future clients in Canada, John Ruffolo, Managing Partner Maverix Private Equity, a Toronto-based PE firm said.All three banks have dedicated technology lending groups.A spokesperson for RBC declined to comment while CIBC and BMO did not respond to requests for comment.Selfe at INFOR Financial said while SVB Canada was a smaller player “it was an important competitor in that market.””I think Canadian banks will continue to lend to earlier stage technology companies but without Silicon Valley Bank as a lender, I think they can afford to be much more selective in who they lend to and potentially increase the price at which they lend.”Canada’s top six banks already control more than 80% of the banking assets and the industry has come has attack from consumers advocates and politicians for its dominance.Benjamin Bergen, president at Council of Canadian Innovators, a lobby group for Canadian technology companies, agreed.”Before SVB went down, accessing capital was increasingly becoming tighter and tighter for Canadians for startups for scale ups,” he said.”And with this, really what we’re hearing from the ecosystem is, you know, it is going to make it even more difficult, so that’s really what we’re monitoring.”Canadian companies saw overall venture capital investment of C$1.3 billion ($947.38 million) so far this year, compared to C$4.5 billion over the first three months of 2022 and C$3.5 billion over the same period in 2021, according to Refinitiv data.Funding environment for start-ups was already getting difficult due to rising interest rates. Investors were also turning selective due to the threat of a recession. Aside from the banks, the federal government also has a Venture Capital Catalyst Initiative program that invests in promising Canadian technology companies. ($1 = 1.3722 Canadian dollars) More

Ahead of Hunt’s annual budget on Wednesday, the finance ministry said each of the zones will be backed by 80 million pounds spread over five years that can be directed towards tax relief for businesses, training and infrastructure.Hunt also announced 100 million pounds ($122 million) of funds to be shared across Glasgow, Manchester and part of central England to improve their research and development centres.Hunt looks set to keep his grip on public finances in the budget, holding off on any big tax cuts or spending increases until the next election comes closer into view.”True levelling up must be about local wealth creation and local decision-making to unblock obstacles to regeneration,” Hunt said in a statement.”From unleashing opportunity through new Investment Zones, to a new approach to accelerating R&D in city regions, we are delivering on our key priority to supercharge growth across the country.”Hunt’s predecessor Kwasi Kwarteng had previously announced investment zones – a key policy of the short-lived Truss government – that would have offered much larger tax relief for businesses but at a larger cost for the government.Truss’s spending plans – and the promise to fund them out of future economic growth – triggered a sell-off in British assets that ultimately ruined her premiership and ushered in Rishi Sunak as her replacement.The finance ministry said it was working closely with the devolved governments of Scotland, Wales and Northern Ireland to establish how investment zones would be delivered in those places.($1 = 0.8222 pounds) More

WASHINGTON (Reuters) – The Biden administration on Monday released details on a new proposal calling for more funding for more air traffic controllers and to speed modernization efforts after a computer outage led to the first nationwide flight grounding since 2001.The Transportation Department’s $108.5 billion budget request seeks funding from Congress, including $117 million to hire another 1,800 air traffic controllers in addition to another 1,500 being hired this year.The National Air Traffic Controllers Association said last year the Federal Aviation Administration (FAA) had 1,500 fewer controllers than in 2011.The FAA wants $115 million to accelerate National Airspace System Modernization saying it will allow the agency “flexibility to adjust to current events in operations and increase capital investments where needed.”A computer system outage disrupted 11,000 U.S. flights in January after contract personnel “unintentionally deleted files.”The Transportation Department wants $3.1 billion in annual funding for passenger railroad Amtrak on top of $4.4 billion in funding from the $1 trillion 2021 infrastructure law. It also seeks $700 million for a key New York Hudson (NYSE:HUD) River tunnel project.In a letter released Friday, Airlines for America, the Air Line Pilots Association, Aerospace Industries Association and others wrote Congress raising “growing concerns about the urgent need for additional human and technological resources.” They added “missed certification deadlines, controller staffing shortages, and slow modernization demonstrate that the FAA is not keeping up with the growing needs and complexity of our aviation system.” The FAA declined comment.The FAA wants $24 million to fund 50 new test pilots, data scientists, safety inspectors and others to oversee Boeing (NYSE:BA) and other airplane manufacturers. The FAA says it has 107 full-time staff members providing Boeing regulatory oversight, up from 82.The National Highway Traffic Safety Administration wants $25.7 million for “automation safety” for expanded rulemaking, enforcement and research; and $12 million for research on Automated Driving Systems as it scrutinizes self-driving vehicles and driver assistance systems. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.After the crash, bang, and wallop of two U.S. banks collapsing and regulators steaming in with emergency measures late on Sunday to prevent contagion from sweeping through markets, the sound you hear now is the screech of economists and investors reversing on their Fed forecasts.If the ratcheting up of U.S. rate expectations in the last few months was almost without precedent, the complete turnaround in the last few days is truly historic.A week ago Barclays (LON:BARC) economists raised their forecast for the Fed’s March 21-22 meeting to a 50 basis point rate hike from 25 bps. On Monday, they changed that to zero.Rates futures markets show traders now reckon the Fed is done raising rates and will cut by 50 bps later this year. The implied ‘terminal’ rate has plunged more than 100 bps since last week to 4.35%, and the year-end implied rate has plummeted more than 150 bps to 3.90%.The two-year Treasury yield’s slide of around 65 bps since Thursday marks the biggest three-day fall since the Black Monday crash in 1987. 2023 implied U.S. interest rates – SOFR futures, https://fingfx.thomsonreuters.com/gfx/mkt/zgpobnqnjvd/SOFR23.png So how will Asian markets open on Tuesday? Equity investors are essentially being pulled in the opposite direction by two competing, and powerful forces. On one hand, huge stress in the U.S. banking system, the collapse of the country’s 16th largest bank and emergency intervention from the Fed, Treasury and FDIC to prevent contagion is a screaming sell signal. U.S. banking stocks tanked 7%, their biggest fall in almost three years.On the other, swift and bold intervention, the most stunning collapse in bond yields and implied interest rates, a sharply weaker dollar, and expectations that the Fed’s tightening campaign is over has clearly tempted a lot of buyers. World stocks fell on Monday and are now down five days in a row, the longest losing streak since October. But Wall Street was mixed – the Dow and S&P 500 ended down 0.3% and 0.15%, respectively, while the Nasdaq rose 0.45%. Hong Kong tech stocks broke a five-day losing streak to jump 3% on Monday, and the Nasdaq’s resilience may provide a springboard for further upside on Tuesday. The weaker dollar and sharply lower U.S. yields could also lead to broader support. But the dust has almost certainly not settled yet, especially if U.S. inflation figures on Tuesday come in hotter than expected.Here are three key developments that could provide more direction to markets on Tuesday:- U.S. CPI inflation (February)- India wholesale inflation (February)- South Korea central bank minutes (By Jamie McGeever; editing by Aurora Ellis) More

(Reuters) – The collapse of two big U.S. regional banks has forced the U.S. bond markets into a near 180-degree turn from pricing in a more aggressive Federal Reserve and is eroding expectations the greenback could resume a new rally to fresh 20-year highs.Emergency measures by the Fed and the U.S. government on Sunday to guarantee bank deposits have failed to reassure markets after Silicon Valley Bank and Signature Bank (NASDAQ:SBNY) collapsed.Since Thursday, the tumble in short-term U.S. Treasury yields, which were at 15-year highs, was the steepest since October 1987, and pulled the dollar down from three-month highs.Two-year yields fell as low as 3.939% on Monday, down more than a percentage point from a 15-year high of 5.084% reached last week, while 10-year yields dipped to 3.418%, from more than 4% last week. The moves come as investors rush for safe havens and adjust for a less aggressive Fed in the wake of the bank failures. The dollar dipped 0.60% against a basket of currencies on Monday. “The market is basically saying that the Fed is done here,” said Mazen Issa, senior FX strategist at TD Securities in New York. “It wouldn’t surprise me if the market now will just try to continuously fade the Fed and won’t believe any kind of realm of hawkishness that emerges, and it’s not clear whether or not the Fed will continue to be hawkish.”Fed Chairman Jerome Powell surprised markets last week when he said that the U.S. central bank might reaccelerate the pace of rate hikes as it battles still-high inflation and benefits from a still strong employment picture. That sent Treasury yields sharply higher and boosted the dollar index.But that prospect now appears off the table.Fed funds futures traders now see the Fed as most likely to leave rates unchanged when it meets on March 21-22, or raise rates by 25 basis points, a dramatic change from last week after Powell’s comments before congressional committees, when a 50 basis points rate increase was viewed as the most likely outcome.Some banks, including Goldman Sachs (NYSE:GS) and NatWest Markets, have also said they no longer expect the Fed to raise rates this month.Traders are also pricing for the Fed to cut rates this year, with the fed funds rate expected to fall to 3.80% in December, from 4.57% now. As of last week, traders had largely given up on the prospect of rate cuts this year. “There are potentially heightened recession risks,” on the back of the financial stability issues, said Jonathan Cohn, head of rates trading strategy at Credit Suisse in New York.While the market may retrace some of Monday’s sharp moves, “there are these kind of prevailing questions around the future provision of credit, of bank lending, that have to be answered before markets are going to price as aggressive of a hiking cycle as they previously were,” Cohn said.Fed officials are in a blackout period before the March meeting, which leaves a dearth of guidance on the extent to which the financial stability risks may alter their view on further tightening.Even if they repeat their commitment to bringing down inflation, investors may be unlikely to embrace the message to the extent they did only last week.“If the market’s assumption as recently as a week ago was the Fed can and will continue to hike no matter what, that’s no longer, I think, the view, (and) it’s going to be very difficult for the market to come back to that view,” said Brian Daingerfield, head of F10 FX strategy at NatWest Markets in Stamford, Connecticut.“From a dollar perspective, that’s very important because the resetting of Fed expectations ever higher was a big part of the dollar rally we had seen before these moves,” he added. More

Good morning. The fallout from the collapse of Silicon Valley Bank remains the big story today. The Federal Reserve has announced that it will lead a review of how the bank was supervised and regulated, as the US central bank comes under fire.Meanwhile, about 500 miles south of California’s Silicon Valley, US president Joe Biden and his Australian and UK counterparts gathered in San Diego earlier today to announce a historic partnership as they work to counter China in the Indo-Pacific.Here’s what else to keep tabs on today:Bangladesh-England cricket: Today’s Twenty20 International cricket match in Dhaka, Bangladesh will be the final match of the series. Net Zero Industry Act: Brussels unveils the proposal as part of its wider Green Deal Industrial Plan.US inflation: Figures are expected to show that consumer prices rose at an annual pace of 6 per cent in February, according to economists’ forecast compiled by Bloomberg.Today’s top news1. Investors are ripping up their forecasts for further rises in interest rates and dumping bank stocks around the world following the failure of Silicon Valley Bank. The two-year US Treasury yield, which moves with interest rate expectations, recorded its biggest one-day drop since 1987.More markets news: Shares in First Republic and several other US regional banks plunged as investors worried that regulators had not done enough.Explainer: Learn how the Federal Reserve’s rescue package for US banks differs from 2008 bailouts.2. HSBC averted a crisis in Britain’s tech sector by rescuing Silicon Valley Bank’s UK arm, a fire sale sealed after all-night talks led by Prime Minister Rishi Sunak and the Bank of England. The deal, which will see HSBC pay a symbolic £1 for SVB UK, avoids the UK government having to step in to protect depositors.3. The US, UK and Australia unveiled a decades-long project to supply Canberra with nuclear-powered submarines. Under the three-stage plan, Australia and Britain will co-build a new submarine based on a modified version of a next-generation boat the UK was already in the process of designing.4. Xi Jinping has pledged to strengthen China’s security and build the military into a “great wall of steel” to defend the country’s interests as relations with the west reach the lowest point in decades. Read more from Xi’s speech yesterday at the close of the annual National People’s Congress.5. Pfizer has offered to buy the drug developer SeaGen in a deal valued at $43bn. The acquisition will bulk up Pfizer’s cancer treatment portfolio as it faces declining sales linked to its Covid-19 treatment. More deals: US private equity group Silver Lake has agreed to buy Qualtrics for $12.5bn alongside Canada’s largest pension fund in the biggest private equity buyout of the year.Join us on March 15-16 at the FT’s Climate Capital Live, where politicians, business leaders and financiers will discuss how organisations move from climate commitments to real action. Register today and claim 10 per cent off your pass using promo code NEWS10.News in-depth

People queued up outside Silicon Valley Bank branches on Monday, after federal regulators said they would guarantee the failed lender’s uninsured deposits © AP

Venture capital firms and tech start-ups appear to have averted crisis following SVB’s collapse with the Federal Reserve’s emergency measures to support depositors. But relief has made way for a round of bitter recriminations, as VCs contemplate a reckoning: by abandoning SVB, they had helped to create a gaping hole at the heart of Silicon Valley.We’re also reading . . . Saudi Arabia-Iran detente: Despite the agreement to restore diplomatic relations, the old foes remain cautious after decades of mistrust. Alpha males: The similarities between UniCredit chief Andrea Orcel and Bob Diamond, who led Barclays in 2012, are troubling, writes Patrick Jenkins.Chart of the dayAbout 85 central banks are engaged in projects to create digital currencies, according to figures from the Bank for International Settlements. Yet governments’ enthusiasm is not matched by the citizens they represent, many of whom view central bank digital currencies as an encroachment into their private lives.Take a break from the newsThe colours were muted on the Oscars champagne carpet — but there were still plenty of standout looks at Hollywood’s biggest night.

Best Actress winner Michelle Yeoh in white Dior Haute Couture at the 95th Academy Awards © Getty Images

Before you go, what was the last Beatles hit before the band broke up? Try your hand at 2-down in our crossword puzzle on the FT app. Additional contributions by Gordon Smith and Tee Zhuo. More