Stock sale from SVB Financial drags US stocks lower

 

Stocks accelerated losses in the final hour of trading Thursday as banks and other financials sold off, and investors braced for a key payroll report Friday that could set the direction of interest rates.

Investors received more news on the state of the labor market ahead of Friday’s closely watched nonfarm payrolls report. Jobless claims for the week ended March 4 rose more than expected, signalling a resilient economy, heightening fears that the Fed needs more hiking to slow it. Traders are now pricing in a 75 per cent chance of a 50 basis point increase

Overnight the Dow Jones Industrial Average fell 544 points, or 1.7 per cent, while the Nasdaq Composite shed 2.1 per cent. The S&P 500 slid 1.9 per cent.

Banking weakness is one of the big stories today SVB Financial tanked 61 per cent after announcing a $1.75 billion stock sale, pushing its market capitalization to a little over $6 billion and dragging down other regional bank names. Silvergate shares plummeted 30 per cent on news that it’s shutting down operations.

The losses pushed that S&P financial sector down 4 per cent for its worst day since June 2020. Financial bellwethers Bank of America and Wells Fargo also took a hit, tumbling more than 6 per cent each.

Adidas is stuck with a very expensive reminder that a lot has changed in the last few years. The athletic brand is sitting on roughly $1.3 billion worth of Yeezy gear after cutting ties with Ye, formerly known as Kanye West, for his antisemitic comments.The company expects an operating loss of over $730 million this year. The last time Adidas reported an annual loss was 30 years ago.

In commodity news, Trafigura CEO, Jeremy Weir, expects looming supply shortages of several crucial metals like copper and lithium could threaten the global transition to clean energy. Additionally, Jeremy Weir stated that the shortage of battery cmetals, including lithium and cobalt, have highlighted the challenges that automakers could face in increasing EVs output.

On the ASX yesterday shares of Piedmont Lithium and Atlantic Lithium were halted on Thursday to allow the companies to prepare a response to a short selling report. The report from Blue Orca claims that after investigating source documents and Ghana corporate records, it found that Atlantic “obtained key Ghana mining licences by making secret payments and promises of payment to the immediate family of a high-level Ghana politician.” Atlantic and Piedmont will seek legal advice to address the claims made by the report.

Overnight, all S&P 500 sectors finished lower. It was a rough session, with Consumer Discretionary, Materials, Real Estate and Communication Services all closing lower by more than 2 per cent, whilst Financial closed 4 per cent lower

Futures

The SPI futures are pointing to a 1.1 per cent fall.

Currency

One Australian dollar at 8:10 AM is buying at 65.90 US cents.

Commodities

Iron ore futures are pointing to a 2.5 per cent gain. Iron ore is 0.9 per cent higher at US$129.00 tonne.

Gold added 0.9 per cent. Silver lost 0.1 per cent. Copper fell 0.4 per cent and oil was down 1.4 per cent.

Figures around the globe

Across the Atlantic, European markets closed mostly lower. London’s FTSE fell 0.6 per cent, Frankfurt closed flat while Paris closed 0.1 per cent lower.

In Asian markets, Tokyo’s Nikkei added 0.6 per cent, Hong Kong’s Hang Seng fell 0.6 per cent while China’s Shanghai Composite closed 0.2 per cent lower.

Yesterday, the Australian sharemarket closed 0.1 per cent higher at 7311.12.

Ex-dividends

Base Resources (ASX:BSE) is paying 2 cents unfranked
Downer EDI (ASX:DOW) is paying 5 cents unfranked
Grange Resources (ASX:GRR) is paying 2 cents fully franked
Insignia Financial (ASX:IFL) is paying 10.5 cents 50 per cent franked
Wisetech Global (ASX:WTC) is paying 6.6 cents fully franked

Dividends payable

Codan (ASX:CDA)
GUD Holdings (ASX:GUD)
JB Hi-Fi (ASX:JBH)
Teaminvest Private Group (ASX:TIP)
Whitehaven Coal (ASX:WHC)

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

Disclaimer

The views, opinions or recommendations of the commentators in this presentation are solely those of the author and do not in any way reflect the views, opinions, recommendations, of Sequoia Financial Group Limited ABN 90 091 744 884 and its related bodies corporate (“SEQ”). SEQ makes no representation or warranty with respect to the accuracy, completeness or currency of the content. Any prices published are accurate subject to the time of filming and shouldn’t be relied upon to make a financial decision. Commentators may hold positions in stocks mentioned and companies may pay FNN to produce the content at times. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian Financial Services Licensee before making investment decisions. To the extent permitted by law, SEQ excludes all liability for any loss or damage arising in any way including by way of negligence.
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