First Citizen acquires large chunk of SVB

 

The Dow Jones Industrial Average rose Monday, building on last week’s gains, as investors attempted to move on from the crisis that broke out in the regional bank sector earlier this month following the collapse of Silicon Valley Bank.

First Citizens BancShares agreed to buy large parts of Silicon Valley Bank, the US Federal Deposit Insurance Corporation said overnight. The deal includes the purchase of approximately $72 billion of SVB assets at a discount of $16.5 billion, but around $90 billion in securities and other assets will remain in receivership for disposition by the Federal deposit insurance corporation.

The blue chip stock index gained 188 points, or 0.6 per cent, to end at 32,426.12. The S&P 500 was up 0.2 per cent to 3,977.53. The Nasdaq Composite finished lower by 0.5 per cent.

To follow on, within the financial sector, Regional banks rose broadly. The SPDR S&P Regional Banking ETF was last higher by 1.6 per cent, after climbing more than 3 per cent earlier in the day. First Republic was the best-performing stock in the fund, surging more than 11 per cent. PacWest also gained 2.7 per cent.

CNBC reported over the weekend that the deposit outflows from small banks to industry giants like JPMorgan Chase and Wells Fargo has slowed in recent days.

Also, Bloomberg News reported that U.S. authorities were considering expanding an emergency lending program for banks, which could give First Republic more time to shore up its liquidity. First Republic ended last week down 46.3 per cent as investors contemplated if the plan from a group of banks to deposit $30 billion would be enough to bolster its balance sheet.

Deutsche Bank also rebounded by more than 5 per cent after traders last week targeted the German lender following the forced-takeover of Credit Suisse.

In technology news, tech stocks fell as an increase in interest rates dampened hopes of a better outlook for growth stocks. Alphabet slid 2 per cent, while Meta slipped 1.2 per cent.

In commodity news, Investment funds have abandoned their bets on copper prices rising due to the impact of the Silicon Valley Bank collapse and ongoing financial market volatility. The initial optimism for copper due to China's re-opening from lockdown has been overshadowed by fear caused by the banking crisis. Short-term players are now trading copper against the dollar and gold, which have become popular safe-haven investments.

Origin Energy (ASX:ORG) has agreed to a takeover deal worth $18.7bn with Brookfield Asset Management and MidOcean Energy, which includes building 14 gigawatts of new renewable and storage generation in Australia over the next ten years. The binding scheme implementation deed includes a payment of $8.91 per share split between $5.78 and $2.19 in Australian and US dollars respectively.

Overall, S&P500 sectors were mixed overnight. Energy was the best performing sector, whilst communication services was the biggest laggard.
 
Futures

The SPI futures are pointing to a 0.4 per cent gain.

Currency

One Australian dollar at 7:20 AM is buying 66.51 US cents..

Commodities

Iron ore futures are pointing to a 0.46 per cent gain.

Gold lost 1.3 per cent. Silver down 0.5 per cent. Copper added 0.5 per cent and oil jumped 5.4 per cent.

Figures around the globe

Across the Atlantic, European markets closed higher. London’s FTSE added 0.9 per cent, Frankfurt gained 1.1 per cent while Paris closed 0.9 per cent higher.

In Asian markets, Tokyo’s Nikkei added 0.3 per cent, Hong Kong’s Hang Seng fell 1.8 per cent while China’s Shanghai Composite closed 0.4 per cent lower.

Yesterday, the Australian sharemarket closed 0.1 per cent higher at 6962.

Ex-dividends

Atlas Arteria (ASX:ALX) is paying 20 cents unfranked
Cedar Woods Properties (ASX:CWP) is paying 13 cents fully franked

Dividends payable

Blackmores (ASX:BKL)
BlueScope Steel (ASX:BSL)
Dusk Group (ASX:DSK)
Grange Resources (ASX:GRR)
Nick Scali (ASX:NCK)
Wesfarmers (ASX:WES)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

Disclaimer

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