Weaker financial sector hits markets: Google and Alphabet rise after market

Stocks slid Tuesday after First Republic Bank’s earnings report reignited concerns about the broader sector.

Pressure on the sector is not over: Moody’s, the rating agency, downgraded 11 regional lenders on Friday, including Zions and Western Alliance.

Overnight the Dow Jones Industrial Average fell 344.57 points, or 1.02 per cent, to end at 33,530.83. The S&P 500 finished 1.58 per cent lower at 4,071.63. The Nasdaq Composite dropped 1.98 per cent to close at 11,799.16.

US markets remained relatively unchanged prior to our Anzac day public holiday here in Australia.

Shares of First Republic Bank tumbled more than 49 per cent after the regional bank posted its latest quarterly results, saying late Monday that deposits dropped 40 per cent to $104.5 billion in the first quarter but have since stabilised. Bloomberg News reported Tuesday that the bank was trying to sell as much as $100 billion of loans and securities to restructure its balance sheet.

First Republic shares have collapsed more than 93 per cent so far this year.

Both the SPDR S&P Regional Banking ETF and SPDR S&P Bank ETF lost more than 4 per cent and 3 per cent, respectively, as financials weighed on the market.

Traders also fretted over a disappointing earnings report from UPS, which dropped about 10 per cent after the company missed expectations and management said sales volumes were — and should continue to be — under pressure. PepsiCo, on the other hand, rose 2.3 per cent on better-than-expected numbers.

Both Microsoft & Alphabet have reported after the market close – Microsoft shares rose 5 per cent in extended trading after the software maker issued fiscal third-quarter results that exceeded analysts’ predictions.

Alphabet shares rose more than 4 per cent in extended trading on Tuesday after Google’s parent reported first-quarter revenue that exceeded analysts’ estimates.

And that meme stock favourite – Bed Bath & Beyond – finally died on Sunday, after the retailer filed for bankruptcy following months of trying to come up with a rescue plan. Its collapse, days after David’s Bridal, the wedding dress chain, also filed for bankruptcy, is the latest sign that the post-pandemic retail landscape boosted by free money and stimulus check spending is over.

Across the sectors, all S&P500 sectors closed lower. Materials was the worst performer, closely followed by Information Technology.

Futures

The SPI futures are pointing to a 0.5 per cent fall.

Currency

One Australian dollar at 7:10 AM is buying 66.27 US cents..

Commodities

Iron ore futures are pointing to a 1.8 per cent fall.

Gold added 0.37 per cent. Silver fell 1.07 per cent. Copper dropped 2.48 per cent and oil lost 2.11 per cent.

Figures around the globe

Across the Atlantic, European markets closed mixed. London’s FTSE lost 0.27 per cent, Frankfurt gained 0.05 per cent while Paris closed 0.56 per cent lower.

In Asian markets, Tokyo’s Nikkei added 0.09 per cent, Hong Kong’s Hang Seng dropped 1.71 per cent and China’s Shanghai Composite closed 0.32 per cent lower.

On Monday, the Australian sharemarket closed 0.11 per cent lower at 7322.

Ex-dividends

Kaizen Global Inv (ASX:KGI) is paying 6.5 cents fully franked

Dividends payable

Adacel Technologies (ASX:ADA)
Australian Clinical Labs (ASX:ACL)

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

Disclaimer

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