Wall Street rose amid a broad relief rally after a slew of measures being taken to rescue troubled banks. A group of financial firms, including Bank of America, Wells Fargo, Citigroup, and JPMorgan Chase, have agreed to deposit $30 billion to aid First Republic Bank’s funding.
Credit Suisse also announced borrowing $50 billion from the SNB. While banking stocks rebound, tech shares advanced further on the policy optimism as investors believe the recent banking turmoil will push the Federal Reserve to soften its tightening tone.
Bond yields across the EU and the US were higher, with the US dollar weakening against the other major currencies as banking chaos slowly settled. Equities across Europe also jumped after the ECB raised the interest rate by 50 basis points and signalled to supply liquidity to banks if needed.
Asian markets are set to open higher, with the ASX futures up 0.39%, the Hang Seng Index futures rising 1.19% and Nikkei 225 futures advancing 1.08%.
- Nine out of 11 sectors in the S&P 500 finished higher, with growth sectors, including technology, communication services, and consumer discretionary, leading gains, up 2.82%, 2.78%, and 1.89%, respectively. Banking shares rebounded amid the rescue measures as the financial sector rose 1.94%. Meantime, consumer staples and real estate were marginally lowers.
- Snap jumped 7% on the news that TikTok’s Chinese parent company ByteDance may have to sell its interests in the US or split the business. The UK government also announced plans to ban TikTok on government devices on security concerns. The video social relating tech shares, such as Meta Platforms and Alphabet also advanced following the news.
- Baidu’s shares tumbled 6.7%, to an eight-week low on the Hong Kong stock markets due to imperfections of its chatbot tool revealed by CEO Robin Li in a public speech. The company’s ADR shares, however, recovered losses on the US markets, up 3.8% following the broad rally in tech.
- Bond market volatility cannot be ignored, as it's only seen during a crisis time. The Fed rate-sensitive US treasury note, the US 2-year bond yield moves about 20 bps on average per day since last week when the SVB’s rout rattled financial markets. This suggests that risks and volatility will be still ahead.
- Crude oil rebounded slightly after the Saudi-Russian ally reassured investors of their production cuts and said the US banking system is safe and sound. WTI futures, however, stayed under $70 per barrel, despite a 1% rise.
- There are no major economic data or events for the APAC region.
- EU February CPI will be on watch today in the European session.
- US industrial production (February) and preliminary UoM consumer sentiment (March) are to be released before the US markets open, gauging the country’s economic health.
ASX and NZX announcements/news
- Synlait Milk Limited shortened its recovery plan to two years from three years, releasing an FY23 net profit after tax guidance range of $15 million to $25 million, due to demand improvement.
- Chorus launched an on-market share buyback programme at NZ$7.9685 (A$7.4029) per share for 836,730 ordinary shares, approved by Board on 20 February.
- Auckland Airport plans for a multi-billion-dollar investment in future of travel at the Airport, which is the biggest redevelopment since the airport opened in 1966.
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