Release of February’s inflation data boosts US shares

 

US stocks rose Tuesday as investors bet the risk of contagion following the closures of Silicon Valley Bank and Signature Bank has been contained.

Traders also focused on the latest US inflation data. The consumer price index rose 0.4 per cent in February from January, matching the consensus estimate of economists polled by Dow Jones. The annualised increase of 6 per cent was also in line with economists’ expectations.

Stocks gave up some gains in the afternoon as investors responded to news of a Russian fighter jet downing a US drone over the Black Sea.

Overall, the Dow Jones Industrial Average ended up 336.26 points, or 1.06 per cent, at 32,155.40, snapping a five-day losing streak. The S&P 500 added 1.65 per cent to close at 3,919.29.

The Nasdaq Composite climbed 2.14 per cent to end at 11,428.15.

While the headlines have been about the banking sector according to S&P Global Ratings, 23 companies defaulted in the first two months of the year, including 15 in February alone. That’s the highest year-to-date total since the GFC with the most defaults being in the retail, media and entertainment industries.

Banks remain the big sector story though regional banks still seeing pockets of weakness: a number of other regional banks remain under scrutiny, with declines in names including Western Alliance Bancorp , Truist Financial Corporation and Zions Bancorporation .

Ratings agency Moody’s has just put six banks on downgrade watch, citing reliance on confidence-sensitive uninsured deposits and significant losses on asset portfolios. This is classic after the event move by a rating agency

And it's not just regional banks, Credit Suisse warns of “material weakness” in its financial reporting. In its annual report, the embattled Swiss bank said it had found problems with financial controls. Shares were down this morning, despite the firm saying that it had taken steps to shore up its accounting.

Charles Schwab is also battling to allay fears about interest rates and unrealised losses after the brokerage’s shares fell 40 per cent following the collapse of Silicon Valley Bank. Schwab, which is the largest brokerage in the US, with $7.4tn in client assets, has seen its shares fall further and faster than its rivals, such as Interactive Brokers, in the wake of SVB’s failure.

In commodity news, Gold prices are surging on safe haven demand amid rising concerns surrounding the US banking system following the rapid collapse of the Silicon Valley Bank and Signature Bank in New York. Given the recent turmoil, gold has surged to its highest level in nearly 2 months as it has just recently surpassed the $1,900/ounce level.

The rally in Bitcoin continues having risen 16 per cent over the last 24 hours.with digital assets roaring to their highest levels since last summer despite widespread fears across financial markets in recent days.

The rally extended beyond financials, with all of the 11 S&P 500 sectors rising in Tuesday’s session. Across the sectors Banking names outperformed the tape as Treasury yields reverted back to higher levels. Banks, investment banks/brokers, exchanges, asset managers, and cards/payments outperformed the sector  

Futures

The SPI futures are pointing to a 0.96 per cent rise.

Currency

One Australian dollar at 8:10 AM has strengthened compared to the US dollar yesterday buying 66.82 US cents (Tue: 66.67 US cents).

Commodities

Iron ore futures are pointing to a 0.6 per cent gain. Iron ore is 0.5 per cent higher at US$133.00 tonne.

Gold lost 0.3 per cent. Silver gained 0.5 per cent. Copper dropped 1.3 per cent and oil lost 4.6 per cent.

Figures around the globe

Across the Atlantic, European markets closed higher. London’s FTSE added 1.2 per cent, Frankfurt gained 1.8 per cent while Paris closed 1.9 per cent higher.

In Asian markets, Tokyo’s Nikkei fell 2.2 per cent, Hong Kong’s Hang Seng lost 2.3 per cent while China’s Shanghai Composite closed 0.7 per cent lower.

Yesterday, the Australian sharemarket closed 1.4 per cent lower at 7009.

Ex-dividends

Eagers Automotive (ASX:APE) is paying 49 cents fully franked
Austal Limited (ASX:ASB) is paying 4 cents unfranked
Breville Group Ltd (ASX:BRG) is paying 15 cents fully franked
COG Financial Services (ASX:COG) is paying 3.7 cents fully franked
Glennon SML Co Ltd (ASX:GC1) is paying 1 cents fully franked
Hearts and Minds (ASX:HM1) is paying 13.5 cents fully franked
Inghams Group (ASX:ING) is paying 4.5 cents fully franked
L1 Long Short Fund (ASX:LSF) is paying 5 cents fully franked
Mercury NZ Limited (ASX:MCY) is paying 7.8804 cents unfranked
Maas Group Holdings (ASX:MGH) is paying 3 cents fully franked
PM Capital Fund (ASX:PGF) is paying 5 cents fully franked
Shriro Holdings Ltd (ASX:SHM) is paying 3.5 cents fully franked
SRG Global Ltd (ASX:SRG) is paying 2 cents fully franked
TPG Telecom Limited (ASX:TPG) is paying 9 cents fully franked

Dividends payable

Bell Financial Group Ltd (ASX:BFG)
Enero Group Ltd (ASX:EGG)
Eumundi Group Ltd (ASX:EBG)
Mayfield Group Holdings Ltd (ASX:MYG)
Virgin Money UK PLC (ASX:VUK)
Winton Land Ltd (ASX:WTN)

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

Disclaimer

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