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Wall Street rebounds on Yellen’s reassurance to depositors

Janet Yellen

US stocks bounded off session lows and finished higher after Treasury Secretary Janet Yellen reassured to protect bank depositors with additional actions. The tech-heavy index, Nasdaq, again outperformed broad markets due to signs of relaxation in bank liquidity. While the bond yields continued to fall, the US dollar declined further against the Japanese Yen, with gold hitting the 2,000 mark before pulling back just under. The movements suggest that investors still seek safety amid the bank turmoil as the fear gauge, VIX, stayed above 22 at a relatively high level.

Elsewhere, the Bank of England raised the interest rate by 25 basis points, and the Swiss National Bank increased the rates by 50 basis points, both of which continued their fights against sticky inflation, despite the recent bank’s rout.  

Notably, coupled with the tech stocks’ outperformance, cryptocurrencies are extremely resilient amid the recent market events, implying the liquidity conditions are pushing up these hard-beaten assets in 2022, which somehow become a haven destination.

Asian stock markets are set to open lower, with the ASX futures down 0.56%, the Hang Seng Index futures falling 0.83%, and Nikkei 225 futures sliding 0.29%.

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  • The US 2-year bond yields fell to a fresh 6-month low, implying a strong expectation for the Fed to pause rate hikes soon. The inversion between the yields of the US 10-year and 2-year notes narrowed sharply since SVB’s fallout, improving the yield curve and liquidity conditions.
  • 9 out of 11 sectors in the S&P 500 closed in the red, with energy and utility sectors leading losses, both down more than 1%. By contrast, growth sectors are robust, led by technology and communication services, up 1.65% and 1.83%, respectively.
  • Block shares tumbled 15% after Hindenburg Research announced that the company lacked criminal activity controls. The short seller said Block highly inflated Cash App to unbanked customers, with up to 35% of the app’s revenue deriving from interchange fees.
  • Gold futures topped 2,000 before retreating to 1,995 amid the recent market turbulence. Gold price is likely to continue climbing towards its all-time high above 2,070 in April 2020.  
  • Crude futures WTI snapped a three-day winning streak after hitting the $70 resistance level following disappointing US inventory data, which showed a 1.1 million barrels build than an expected draw for the last week on Wednesday. OPEC +’s reluctance to cut production also pressured the oil prices.
  • Cryptocurrencies regained steam following tech share’s outperformance. Bitcoin rose to above 28,000 again, while Ethereum topped 1,800.

Today’s agenda:

  • Australian flash manufacturing and services PMI for March.
  • Japan’s national CPI y/y and flash manufacturing PMI for March
  • UK’s retail sales for February and EU counties’ flash manufacturing and services PMIs for March.

ASX and NZX announcements/news:

  • Care A2 Plus is pushing ahead with plans for an ASX compliance listing. The private company holds the license to import infant formula to the US.
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