Overnight Asia

Asian equities slipped more than 1% on Wednesday, with a benchmark of Emerging Markets falling more as investors adjusted for the prospect of higher borrowing costs. Contracts for Euro Stoxx 50 declined 0.2% while those for US benchmarks were marginally lower after the S&P 500 lost the most in two weeks. Some of the heaviest losses were in Hong Kong, where the Hang Seng Index declined more than 2% amid signs that derivatives and structured products were amplifying falls. Shares of Asian energy companies and miners dropped as a combination of the Fed outlook and China’s modest economic growth target weighed on commodities. 

The Yen continued to weaken, the Yuan traded just below the key level of seven versus the Dollar, and the currencies of Australia and New Zealand held large losses from the previous session. That’s sent short-end yields skyrocketing and prompted a shift higher in rate-hike bets.

The two-year Treasury yield rose as high as 5.08% in Asia as it hovered at levels last seen in mid 2007. The rate has now surpassed its 10-year equivalent by a full percentage point for the first time since 1981. This is playing out in a deeply inverted yield curve - a potential harbinger of recession.

Elsewhere in markets, oil held a deep loss from Tuesday as the outlook for rate hikes raised concerns over a drag on demand. Gold was little changed after falling to the lowest in a week in response to Powell. Iron ore dipped as investors weighed data that suggests China’s steel consumption remains slow.

Key events this week:

• Euro area GDP, Wednesday
• US MBA mortgage applications, ADP employment change, trade balance, JOLTS job openings, Wednesday
• Fed Chair Powell’s semi-annual Monetary Policy Report to the House Financial Services Committee, Wednesday
• Canada rate decision, Wednesday
• EIA Crude oil inventories, Wednesday
• China CPI, PPI, Thursday
• US Challenger job cuts, initial jobless claims, household change in net worth, Thursday
• Bank of Japan policy rate decision, Friday
• US non-farm payrolls, unemployment rate, monthly budget statement, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 6.35 am London time. The S&P 500 fell 1.50% on Tuesday
• Nasdaq 100 futures fell 0.10%. The Nasdaq 100 fell 1.20%
• Euro Stoxx 50 futures fell 0.20%
• Australia’s S&P/ASX 200 Index fell 0.80%
• Japan’s Topix rose 0.30%
• Hong Kong’s Hang Seng fell 2.20%
• The Shanghai Composite fell 0.30%

Currencies

• The Bloomberg Dollar Spot Index rose 0.20%
• The Euro fell 0.10% to $1.0536
• The Japanese Yen fell 0.40% to 137.67 per Dollar
• The offshore Yuan rose 0.20% to 6.9771 per Dollar
• The Australian Dollar rose 0.20% to $0.6594
• The British Pound was little changed at $1.1825

Bonds

• The yield on 10-year Treasuries advanced three basis points to 4.00%
• Japan’s 10-year yield was little changed at 0.50%
• Australia’s 10-year yield advanced six basis points to 3.74%

Cryptocurrencies

• Bitcoin was little changed at $22,036.28
• Ether rose 0.30% to $1,554.91

Commodities

• West Texas Intermediate Crude was little changed
• Spot gold was little changed

US Market Wrap

US stocks plummeted on Tuesday as Federal Reserve Chair Jerome Powell warned interest rates were likely to be higher than previously anticipated. The S&P 500 closed down 1.5%, the biggest decline in two weeks, with all eleven sectors ending lower. The tech-heavy Nasdaq 100 declined 1.2%, and the Dow Jones Industrial Average dropped 1.7%. 

Tuesday’s broad sell-off came after US equities had started to recover this month from the sharp drop in February, when stronger-than-expected economic and inflation data fuelled concerns about a hawkish response from the Fed trying to keep price growth in check.

With Powell’s latest comments taking the wind out of that nascent March rally, all eyes will now move to the jobs numbers that will be out on Friday. US payroll growth has topped estimates for 10 straight months in the longest streak in decades, a trend that, if extended, will boost pressure on the Fed to keep raising interest rates. 

Powell, who will appear in Congress again later in the day, signalled during Senate testimony on Tuesday that officials were ready to speed up the pace of tightening and take rates to higher levels if inflation remains hot.

Meanwhile, Citigroup Inc. strategists said that the bullish positioning in S&P 500 futures rose last week, but weekly notional changes were relatively small, with positioning net long and marginally above long-term averages. They added that bearish sentiment in Nasdaq futures continued to develop, even as the underlying Index climbed. 

Source: atomos

atomos is the trading name of Atomos Investments Limited, which is authorised and regulated by the Financial Conduct Authority. 

Overnight Asia

The two-year Treasury whipsawed, European and US stock futures fluctuated and Asian equities slumped as problems at Credit Suisse Group AG added to the woes faced by the global banking sector. Financial stocks have taken the brunt of the losses in share markets, shedding $465 billion in market value in two days. A gauge of Asian stocks fell 2%, wiping out gains for 2023. 

The yield on the two-year Treasury slid as much as 15 basis points to 3.82% after an earlier advance of 22 basis points. It was flat in late Asian trading as investors digested news that Credit Suisse identified material weaknesses in its internal controls over financial reporting. 

Japan’s 10-year government bond yield momentarily fell below 0.25%, which is half the Central Bank’s target ceiling. Yields on New Zealand’s two-year government bond tumbled more than 20 basis points, while the rate on Australia’s three-year maturity fell about 15 basis points. 

Key Data

Traders are looking to the US Consumer Price Index report later in the day for cues that may trigger further shifts in bets on the Fed’s next move.  

Oil extended a decline ahead of the inflation data as the biggest US bank collapse since 2008 continued to ripple through financial markets, while Asian energy shares fell. Gold slid after rising in the three previous sessions as traders turned to haven assets.

Key events this week:

• US inflation, Tuesday
• China retail sales, industrial production, medium-term lending, surveyed jobless rate, Wednesday
• Eurozone industrial production, Wednesday
• US business inventories, retail sales, PPI, empire manufacturing, Wednesday
• Eurozone rate decision, Thursday
• US housing starts, initial jobless claims, Thursday
• Janet Yellen appears before the Senate Finance Committee, Thursday
• University of Michigan Consumer Sentiment, industrial production, Conference Board Leading Index, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.40% as of 7.15 am London time. The S&P 500 fell 0.20% Monday
• Nasdaq 100 futures rose 0.40%. The Nasdaq 100 rose 0.80%
• Euro Stoxx 50 futures rose 0.10%
• Japan’s Topix Index fell 2.70%
• Hong Kong’s Hang Seng Index fell 2.20%
• China’s Shanghai Composite Index fell 0.70%
• Australia’s S&P/ASX 200 Index fell 1.40%

Currencies

• The Bloomberg Dollar Spot Index rose 0.10%
• The Euro fell 0.30% to $1.0700
• The Japanese Yen fell 0.30% to 133.65 per Dollar
• The offshore Yuan fell 0.20% to 6.8656 per Dollar
• The British Pound was little changed at $1.2178

Bonds

• The yield on 10-year Treasuries declined five basis points to 3.52%
• Japan’s 10-year yield declined 3.5 basis points to 0.26%
• Australia’s 10-year yield declined seven basis points to 3.45%

Cryptocurrencies

• Bitcoin rose 1.10% to $24,504.97
• Ether rose 0.70% to $1,683.12

Commodities

• West Texas Intermediate Crude fell 1.10% to $73.95 a barrel
• Spot gold fell 0.20% to $1,910.45 an ounce

US Market Wrap

US stocks closed slightly lower on Monday after rebounding from earlier losses as investors weighed the fall-out from the collapse of Silicon Valley Bank and dip buyers emerged in defensive stocks and some big tech names. The fall-out from SVB’s collapse prompted President Joe Biden to promise stronger regulation of US lenders, while reassuring depositors that their money is safe. The SVB meltdown has also caused a swift repricing in credit risk. Yield premiums on company debt, which had trended lower for much of this year, have climbed back to levels seen in November, according to a Bloomberg Index.

The benchmark S&P 500 Index dropped 0.2% after swinging between gains and losses of more than 1%, with sectors including utilities and health care, and bids for Apple Inc. and Microsoft Corp. helping counter a slide in financial stocks. The tech-heavy Nasdaq 100 jumped 0.8% while the blue-chip Dow Jones Industrial Average slipped 0.3%. Treasury yields plunged, with the two-year falling to 3.96% and the 10-year to 3.53%. Meanwhile, most major US banking stocks slumped as fears mounted about the health of the broader financial system with the sudden closure of Signature Bank. Most large US banks slipped with JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. all traded lower. 

Swaps markets have pared bets to around even odds that the Federal Reserve will implement another quarter-point hike at the 22 March decision after leaning towards a half-point increase last week. Moreover, traders are now pricing in rate cuts from the Fed by the end of the year, a shift from earlier last week when traders rushed to price in higher peaks.

After a powerful rally to start the year mostly fizzled out, investors are forced to weigh economic data and a resolute Fed against the mounting problems hitting the nation’s banking sector. Traders will get a key update on Tuesday with inflation data coming ahead of the market open.  

Sectors in focus

• Crypto-exposed stocks were active after Bitcoin jumped on US agencies’ pledge to fully protect all Silicon Valley Bank depositors following the lender’s collapse
• Gold miners rally as assets with safe-haven appeal gain as investors assess the wider impact of the collapse of Silicon Valley Bank and Silvergate Capital
• The Nasdaq Biotechnology Index is rallying Monday — up as much as 3.5%, the most since 10 November — after Pfizer’s acquisition of Seagen and Sanofi’s deal for Provention Bio lifted sentiment in the sector

Source: atomos

atomos is the trading name of Atomos Investments Limited, which is authorised and regulated by the Financial Conduct Authority. 

Overnight Asia

US and European equities futures advanced with Asian shares on Friday after a rescue package for First Republic Bank soothed concerns over financial stability. Indices rose in Hong Kong, Japan and Australia amid a rebound in banking shares. Even so, an Asia equity gauge was set for a second weekly loss after the recent turbulence in the banking sector. Technology stocks were among the best performers on Friday, with the Hang Seng Tech Index jumping more than 4%. The moves in Asia followed the S&P 500 notching its largest one-day advance since January on Thursday as the biggest US lenders agreed to contribute $30 billion in deposits to First Republic. That eased speculation that the bank could be the next to fail after two high profile demises touched off the crisis last week. 

Markets were also digesting a 50-basis points rate hike by the European Central Bank and comments from the ECB president that inflation is projected to remain too high for too long. The ECB rate hike added to bets the Federal Reserve will also raise next week.

The First Republic news came after a lifeline from Swiss regulators earlier this week stabilised Credit Suisse Group AG, easing worries that troubles at the European lender would lead to a cascading crisis in that region. The idea of a forced combination with a larger rival, UBS Group AG, was shot down on Thursday and receipts in Credit Suisse ended the session unchanged. The cost to insure the Swiss bank’s debt has been rising.

In China, traders were able to access widely used bond price feeds again after an abrupt suspension of the data earlier in the week roiled the $21 trillion market.

Elsewhere, oil advanced but was still headed for the worst week so far this year after the recent turmoil in the financial sector. Gold rose.

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 6.45 am London time. The S&P 500 rose 1.80%
• Nasdaq 100 futures rose 0.20%. The Nasdaq 100 rose 2.70%
• Euro Stoxx 50 futures rose 0.50%
• Japan’s Topix Index rose 1.20%
• Hong Kong’s Hang Seng Index rose 1.30%
• China’s Shanghai Composite Index rose 0.70%
• Australia’s S&P/ASX 200 Index rose 0.40%

Currencies

• The Bloomberg Dollar Spot Index fell 0.30%
• The Euro rose 0.40% to $1.0648
• The Japanese Yen rose 0.50% to 133.01 per Dollar
• The offshore Yuan rose 0.30% to 6.8729 per Dollar
• The Australian Dollar rose 0.80% to $0.6707
• The British Pound rose 0.40% to $1.2151

Bonds

• The yield on 10-year Treasuries declined three basis points to 3.54%
• Japan’s 10-year yield declined one basis point to 0.27%
• Australia’s 10-year yield advanced six basis points to 3.39%

Cryptocurrencies

• Bitcoin rose 5.80% to $26,190.91
• Ether rose 4.00% to $1,725.48

Commodities

• West Texas Intermediate Crude rose 0.30% to $68.58 a barrel
• Spot gold rose 0.60% to $1,931.19 an ounce

US Market Wrap

The S&P 500 rallied for its best day since January, rebounding from an initial decline as fears over the finance sector began to ease with big banks stepping in to support First Republic Bank. The benchmark jumped 1.8% in New York, with Microsoft Corp., Apple Inc., and Amazon.com Inc. providing the biggest lift, while the tech-heavy Nasdaq 100 rallied 2.7%. The blue-chip Dow Jones Industrial Average rose 1.2%. First Republic Bank erased a 36% drop to rally with banks including JPMorgan Chase & Co. and Bank of America Corp. agreeing to deposit $30 billion to stem the turmoil that’s sent depositors fleeing from regional banks. The NYSE FANG+ Index rallied 3.7% to the highest level since 2 February.

The Federal Reserve, Treasury, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency welcomed the $30 billion deposit. The Fed said it “stands ready to provide liquidity through the discount window to all eligible institutions.” 

Investors will now focus on what the Federal Reserve does next week. Traders who, on Wednesday, had largely abandoned bets for a ninth Fed rate hike next week upgraded the odds of a quarter-point move back to around 80%. 

Investors have been grappling with weakness in the banking sector amid a strong underlying economy and how that may impact the Fed’s policy path. Initial unemployment claims decreased by 20,000 to 192,000 in the week ended 11 March, Labour Department data showed on Thursday.

Sectors in focus

• Office building landlords were some of the biggest decliners among US real estate stocks on Thursday
• Amazon.com and Alphabet outperformed amid a broad rally in technology stocks

Source: atomos

atomos is the trading name of Atomos Investments Limited, which is authorised and regulated by the Financial Conduct Authority. 

Overnight Asia

US and European equity futures dropped, Treasury yields declined and the Dollar fluctuated as efforts to safeguard the global banking system failed to soothe market jitters. Positive early readings on UBS Group AG’s agreement to buy Credit Suisse Group AG, and Central Bank moves to boost Dollar liquidity gave way to a more cautious sentiment as the trading day progressed. Financial stocks slid during Asian trading, led by HSBC Holdings Plc, whose shares dropped more than 7% in Hong Kong on concern over risky bond exposures related to Credit Suisse. Equities benchmarks for Hong Kong, Japan and Australia extended declines, pushing an Asian stock gauge down 1.4%. Contracts for the S&P 500 swung from a gain of 0.8% to losses of around 1%.

A measure of Dollar strength swung between small gains and losses. The Swiss Franc and the Euro fluctuated. The policy-sensitive two-year Treasury yield, fell nearly 20 basis points on Monday, adding to a slump of more than 30 basis points on Friday. It had rebounded 18 basis points earlier in the volatile Asian session.

Policymakers are rushing to shore up confidence after the collapse of Silicon Valley Bank and problems at Credit Suisse added to broader concerns over financial stability. UBS’s government-backed take-over of Credit Suisse seeks to address client outflows and a massive rout in the target’s stock and bonds. The Fed and five other Central Banks announced coordinated action to boost liquidity in US Dollar swap arrangements to ease strains in the global financial system.

Oil dropped and gold fluctuated.

Key events this week:

• ECB President Christine Lagarde appears before European Parliament’s economic committee, Monday
• US existing home sales, Tuesday
• US Treasury Secretary Janet Yellen to appear at Senate sub-committee hearing, Wednesday
• FOMC rate decision, news conference from Chair Jerome Powell, Wednesday
• EIA Crude oil inventory report, Wednesday
• Eurozone Consumer Confidence, Thursday
• BOE interest rate decision, Thursday
• Swiss National Bank rate decision and press conference, Thursday
• US new home sales, initial jobless claims, Thursday
• US Treasury Secretary Janet Yellen testifies to a House Appropriations sub-committee, Thursday
• Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday
• US durable goods, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 1.00% as of 6.51 am London time. The S&P 500 fell 1.10% on Friday
• Nasdaq 100 futures fell 0.80%. The Nasdaq 100 fell 0.50%
• Euro Stoxx 50 futures fell 1.90%
• Japan’s Topix Index fell 1.50%
• Hong Kong’s Hang Seng Index fell 3.40%
• China’s Shanghai Composite Index fell 0.50%
• Australia’s S&P/ASX 200 Index fell 1.40%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The Euro was little changed at $1.0664
• The Japanese Yen rose 0.50% to 131.16 per Dollar
• The offshore Yuan fell 0.20% to 6.8977 per Dollar
• The Australian Dollar fell 0.30% to $0.6677
• The Swiss Franc was little changed at 0.9252
• The British Pound was little changed at $1.2180

Bonds

• The yield on 10-year Treasuries declined 10 basis points to 3.33%
• Japan’s 10-year yield declined two basis points to 0.25%
• Australia’s 10-year yield declined 15 basis points to 3.24%

Cryptocurrencies

• Bitcoin fell 1.10% to $27,671.23
• Ether fell 2.00% to $1,762.85

Commodities

• West Texas Intermediate Crude fell 2.70% to $64.96 a barrel
• Spot gold was little changed

US Market Wrap

US equities ended a volatile week higher, despite sliding on Friday amid mounting concerns the turmoil hitting the banking sector will tip the global economy into recession. The S&P 500 Index fell 1.1%, but held onto a 1.4% weekly gain. The tech-heavy Nasdaq 100 slipped 0.5%, but capped its best week since November while the Dow Jones Industrial Average fell 388 points to drop 0.2% over the week. Financial stocks were the biggest drag on the S&P 500 as a $30 billion cash infusion for First Republic Bank was seen as a short-term solution that left investors unsatisfied.

Investors remain focused on what the Federal Reserve will do next week. Much of the debate in markets is now focused on whether the Fed will deliver another quarter-point hike or pause at its 21 to 22 March meeting. The financial markets volatility has clouded the economic outlook and will likely lead the Fed to pause its tightening cycle at next week’s meeting, according to Wells Fargo’s economics team.

Sectors in focus

• Delivery services such as UPS were in focus after FedEx boosted its guidance
• Financial stocks underperformed after First Republic Bank sank amid concerns the rescue package may not be enough

Source: atomos

atomos is the trading name of Atomos Investments Limited, which is authorised and regulated by the Financial Conduct Authority.

Overnight Asia

A mildly positive tone for risk-taking took hold in European equity futures and Asian share markets on Tuesday as immediate concerns over the strength of the global financial system dissipated. Contracts for the Euro Stoxx 50 climbed as much as 0.9%. A benchmark of Asian stocks gained about 0.7% amid gains in Hong Kong, South Korea and Australia. Most sectors rose in the region with the MSCI Asia Pacific Financials Index adding 0.6%.

Futures for the S&P 500 rose slightly following a jump of 0.9% on Monday in the underlying Index. Earlier, news that US officials were studying ways to temporarily guarantee all bank deposits if the current financial crisis expands sent contracts for the S&P 500 and the Nasdaq 100 to their intraday highs. The Dollar ticked higher and was set to end a three-day losing streak, which sent a measure of the greenback’s strength to a month-low on Monday.

Government bond yields were lower in Australia and New Zealand after Treasuries whipsawed through the global trading day on Monday. Board minutes showing that Australia’s Central Bank would consider a pause in rate hikes next month weighed on the nation’s yields and the Australian Dollar. 

The policy-sensitive two-year US Treasury yield ended Monday 14 basis points higher and just below 4%. There was no trading of cash Treasuries in Asia hours on Tuesday with a holiday in Japan.

Investors are closely monitoring the Fed’s meeting and have increased bets on a quarter-point hike as the recent financial turmoil has spurred speculation on a slower pace of tightening from major Central Banks worldwide.

Elsewhere, oil fell after a turbulent session even as a calmer tone returned to the market. Gold fell.

Key events this week:

• US existing home sales, Tuesday
• US Treasury Secretary Janet Yellen to appear at Senate sub-committee hearing, Wednesday
• FOMC rate decision, news conference from Chair Jerome Powell, Wednesday
• EIA Crude oil inventory report, Wednesday
• Eurozone Consumer Confidence, Thursday
• BOE interest rate decision, Thursday
• Swiss National Bank rate decision and press conference, Thursday
• US new home sales, initial jobless claims, Thursday
• US Treasury Secretary Janet Yellen testifies to a House Appropriations sub-committee, Thursday
• Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday
• US durable goods, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.10% as of 6.43 am London time. The S&P 500 rose 0.90% on Monday
• Nasdaq 100 futures rose 0.10%. The Nasdaq 100 rose 0.30%
• Euro Stoxx 50 futures rose 0.70%
• South Korea’s Kospi Index rose 0.40%
• Hong Kong’s Hang Seng Index rose 0.90%
• China’s Shanghai Composite Index rose 0.60%
• Australia’s S&P/ASX 200 Index rose 0.80%

Currencies

• The Bloomberg Dollar Spot Index rose 0.20%
• The Euro fell 0.10% to $1.0706
• The Japanese Yen fell 0.20% to 131.62 per Dollar
• The offshore Yuan fell 0.10% to 6.8806 per Dollar
• The Australian Dollar fell 0.60% to $0.6679
• The British Pound fell 0.30% to $1.2247

Bonds

• The yield on 10-year Treasuries advanced six basis points to 3.48% on Monday
• Australia’s 10-year yield declined five basis points to 3.19%

Cryptocurrencies

• Bitcoin fell 1.00% to $27,808.05
• Ether fell 0.70% to $1,749.62

Commodities

• West Texas Intermediate Crude fell 1.10% to $66.87 a barrel
• Spot gold fell 0.30% to $1,972.83 an ounce

US Market Wrap

Equities rallied on Monday on efforts to soothe investor fears and stabilise the banking sector ahead of the Federal Reserve’s interest rate decision on Wednesday, when some investors are wagering the Central Bank may pause its tightening campaign because of the turbulence caused by the failure of three US lenders. The S&P 500 Index climbed 0.9% as every sector in the Index gained, led by energy and materials stocks. On the benchmark 440 stocks rose, 62 fell and 1 was unchanged. The Dow Jones Industrial Average rose 1.2% while the tech-heavy Nasdaq 100 erased earlier losses to gain 0.4%. 

Many regional banks climbed on Monday, a relief for investors after two weeks of declines, on a combination of UBS Group AG’s agreement to buy Credit Suisse Group AG, and moves by the Fed and five other Central Banks to boost liquidity in an effort to restore confidence in the global financial system. Still, fears continue to plague some lenders as First Republic Bank, the worst performing stock in S&P 500 on Monday, dropped 47% to a record low and extended last week’s record loss after S&P Global Inc. cut its credit rating again.

Wall Street analysts expect continued volatility this week, after the KBW Bank Index plunged over the past two weeks amid concerns over Credit Suisse, the recent failure of Silicon Valley Bank and liquidity concerns in the banking sector.

Sectors in focus

• Select North American precious metals mining stocks gained after a $3.2 billion deal between UBS and troubled lender Credit Suisse failed to calm nerves in the banking industry, knocking risk appetite
• Real estate investment trusts are climbing, along with banks, as investors regain confidence in financial institutions following recent market turmoil
• Major US technology and internet stocks wobbled on Monday, with the group initially retreating in the wake of strong gains from last week

Source: atomos

atomos is the trading name of Atomos Investments Limited, which is authorised and regulated by the Financial Conduct Authority. 

Overnight Asia

Contracts for European equities fell and Asian shares edged lower on Friday. The Yen rallied. Euro Stoxx 50 futures declined around 0.7%, while a gauge of Asian shares slid after earlier swings between gains and losses. Financials were among the worst-performing sectors on MSCI Inc.’s Asia-wide Index. US stock futures held small gains. Despite the Nasdaq 100 pushing near to the threshold of a bull market on Thursday, banking stocks missed out on the rally and a measure of US financial heavyweights sank to the lowest since November 2020.

Treasury yields fell and were on course for a third day of declines while the Dollar steadied after weakening in the previous six sessions as investors positioned for the Federal Reserve to slash interest rates later this year. Short-dated Treasuries posted outsized moves for an 11^th straight trading day Thursday and the yields were broadly lower on Friday. 

Australia and New Zealand government bond yields declined and Japan’s benchmark 10-year bond yield fell 1.5 basis points to 0.28%. The Yen advanced to the highest in six weeks on demand for haven assets amid concern over the health of global banking sector. 

Meanwhile, a measure of the nation’s inflation slowed for the first time in 13 months but gains in prices excluding fresh food and energy suggested stronger underlying inflationary pressures. This also supported the Yen via market speculation that incoming BOJ Governor Kazuo Ueda may have to move towards policy normalisation sooner rather than later.

Comments by Yellen about additional deposit actions, if warranted, offered investors comfort while they digested earlier rate hikes by the Bank of England, Norges Bank and Swiss National Bank, as well as hawkish comments by European Central Bank officials. 



In the commodity space, oil was steady and headed for a weekly gain amid concerns that the refilling of the US’s strategic crude inventories would take longer than previously expected. Gold was slightly lower.

Key events this week:

• Global Eurozone Services PMI, Friday
• US durable goods, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.20% as of 6.50 am London time. The S&P 500 rose 0.30%
• Nasdaq 100 futures rose 0.10%. The Nasdaq 100 rose 1.30%
• Euro Stoxx 50 futures fell 0.70%
• Japan’s Topix Index fell 0.10%
• Hong Kong’s Hang Seng Index fell 0.90%
• China’s Shanghai Composite Index fell 0.70%
• Australia’s S&P/ASX 200 Index fell 0.20%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The Euro was little changed at $1.0832
• The Japanese Yen rose 0.40% to 130.34 per Dollar
• The offshore Yuan fell 0.30% to 6.8472 per Dollar
• The Australian Dollar rose 0.10% to $0.6691
• The British Pound was little changed at $1.2280

Bonds

• The yield on 10-year Treasuries declined three basis points to 3.39%
• Japan’s 10-year yield declined 1.5 basis points to 0.28%
• Australia’s 10-year yield declined seven basis points to 3.22%

Cryptocurrencies

• Bitcoin fell 0.10% to $28,304.24
• Ether fell 0.20% to $1,815.95

Commodities

• West Texas Intermediate Crude rose 0.10% to $70.05 a barrel
• Spot gold fell 0.30% to $1,988.14 an ounce

US Market Wrap

US stocks finished higher in volatile trading on Thursday, clawing back some of the Wednesday's sell-off as investors attempted to shake off concerns about banking sector stability and the impact of an expected credit crunch.

How stocks traded

The Dow fell 530 points on Wednesday as Treasury Secretary Janet Yellen's remark that her department had not discussed blanket protections for bank deposits appeared to overshadow the Federal Reserve's latest interest rate hike.

What drove markets

US stocks Indices rallied to finish modestly higher on Thursday after wavering between gains and losses in the afternoon trading, as investors reassessed Treasury Secretary Janet Yellen's comments on bank failures and the Federal Reserve's rate path after its interest rate decisions. 

On Wednesday, stocks ended sharply lower after Yellen said that there was no discussion on insuring all bank deposits. Yellen told a Senate committee that blanket deposit insurance hadn't been considered or discussed by her department. However, Yellen also said late Thursday the federal government would take extra steps to stabilise the US banking system if necessary, in prepared remarks for a House hearing.

Fed Chair Jerome Powell said in a press conference on Wednesday that the US banking system remains sound and resilient, with strong capital and liquidity, with Fed actions in recent weeks demonstrating "that all depositor savings in the banking system are safe." He also said that the process of getting inflation lower still "has a long way to go" and rate cuts are not in their base case for the remainder of 2023.

Economic data released on Thursday showed the number of Americans applying for unemployment benefits declined last week to 191,000, the lowest number in three weeks. New data released on Thursday showed new-home sales of 640,000 in February compared with a revised 633,000 in January.

Outside the US, both the Swiss National Bank and Bank of England delivered interest rate hikes less than 24 hours after the Fed's. The Swiss Central Bank lifted borrowing costs by 50 basis points after local authorities helped put together a hastily arranged deal for UBS Group (UBS) to take over scandal-scarred crosstown rival Credit Suisse Group (CSGN.EB). In the UK, the Bank of England raised its policy rate by 25 basis points, its 11^th consecutive increase.

MOODY'S: WIDER BANK 'TURMOIL' A RISK

There is a rising risk that regulators "will be unable to curtail the current turmoil without longer-lasting and potentially severe repercussions within and beyond the banking sector." That could trigger greater "financial and economic damage than we anticipated," Moody's Investor Service warned on Thursday. Still, the credit ratings agency still expects policymakers to "broadly succeed."

Source: atomos

atomos is the trading name of Atomos Investments Limited, which is authorised and regulated by the Financial Conduct Authority.