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Wall Street rebounds on Fed bets as CPI cools, and banking shares jump

Wall Street finishes higher on a broad-based rally as banking stocks rebounded from the sharp selloff from the last two trading days amid rescue measures taken by regulators. The US February headline CPI cooled further to 6% in line with expectations, enhancing bets for a pause or slowdown in rate hikes by the Fed next week. Tech continued to rally amid policy optimism, while the VIX slid 7% to above 24. The US bond yields also gained after a three-day slump, limiting losses of the USD against other major currencies.

Asian markets are set to open higher following Wall Street’s comeback, with the ASX futures up 0.96%, the Hang Seng Index futures rising 1.48% and Nikkei 225 futures advancing 0.63%.

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Global headlines: 

  • All the 11 sectors in the S&P 500 finished higher, with communication services, technology, and financials leading gains, all up more than 2%. The regional bank stocks sharply rebounded, with shares of First Republic Bank surging 27% after a 62% slump on Monday. Growth stocks’ outperformance is notably strong this year as markets keep pricing in a Fed policy turnaround, while the energy sector lost steam on a further slump in oil prices.
  • Meta’s shares jumped more than 7% after the company announces to lay off 10,000 workers in the second round of headcount reduction, after 11,000 job cuts in November 2022. CEO Mark Zuckerberg warns that economic headwinds may last for years, and the job cut aims to flatten the organization by “cancelling lower priority projects.”
  • Bitcoin spiked to a 9-month high of above 26,500 before pulling back to just under 28,000 as cryptocurrencies also reacted to a potential Fed policy turnaround. Ethereum jumped to above 1,700 at a 6-month high.
  • Crude oil tumbled for the fourth trading day to a 9-week low amid the US banks’ fallout. While markets react to a financial crisis, energy becomes venerable to gloomy demand outlooks. But today’s Chinese data may offer some upside momentum. The WTI futures’ key support level is still seen at around $70 per barrel. 

Today's Agenda: 

  • A slew of key Chinese economic data for February, including fixed asset investment, industrial production, and retail sales are on investors’ radar. Shall these data provide a positive print, Asian markets may take further rebounding tailwinds.

ASX and NZX announcement:

  • The Australia based and NZX listed dairy firm, A2 Milk announced an on-market share buyback program, with NZ$6.9782 (A$6.5276) per security for 275,000 ordinary shares.
  • Mercury is hosting Investor Day 2023 in Palmerston North, which includes presentations from the Executive Management Team and other senior managers of the company.
  • Arrow Minerals announces the confirmation of high-grade iron analytical results from rock chip samples collected on the Simandou North Iron Project, Guinea. 

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