US equity markets were mixed on Monday, with both the S&P500 and Dow Jones industrials closing the day slightly higher, up 0.16% and 0.60% respectively, while the technology-heavy Nasdaq100 retreated, dipping 0.70%.
United States
There is plenty still happening across the US banking sector, which has been rocked recently by several bank failures. In more recent news, First Citizens Bancshares has agreed to buy SVB Financial Group’s Silicon Valley Bank. According to a statement by the FDIC, the deal includes several favourable terms including the purchase of approximately US$72 billion of SVB’s assets at a hefty discount of around 23%. The cost to the deposit insurance fund stands at approximately US$20 billion. From the S&P500 on Monday, the energy sector was the top performer, gaining 2.10%, followed by the financials (+1.40%), and industrials (+0.82%).
Banking stocks led the advances on Monday, with Bank of America (BAC) and Citigroup (C) gaining by 4.97% and 3.87% respectively. Alphabet (GOOG) fell by -2.83%, while Meta Platforms (META) declined by -1.54%.
The yield on the US 10-year bond increased to 3.54%, while the yield on the 2-year bond jumped to above 4%. With short-term rates still above the longer-term rates, the yield curve remains ‘inverted’, which is often a predictor of an economic downturn in the months ahead. Overnight, Goldman Sachs raised the odds of a US recession from 25% to 35%. With the 2-year yield now well below that of the Fed Funds rate at 5%, it is hard to see the Fed hiking once again at their next meeting, however, markets remain priced for an additional 0.25% increase. Investors will be watching the release of the personal consumption expenditures price index, later in the week, which is one of the Fed’s preferred measures of price pressure.
Europe
Equities in Europe were higher across the board, led by the German Dax which rallied 1.14%, while in France, the CAC40 gained 0.90%, and the UK’s FTSE100 closed 0.90% higher also. From the EuroStoxx50 Index, all sectors barring Real Estate (-0.15%) closed the day higher, led by the financials and utilities, which gained by 1.22% and 1.15% respectively.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
Australia
Locally, the Australian share market closed slightly in the green on Monday, adding 6.75 points (+0.10%) to close at 6,961.98. Traders and Investors should expect additional gains on the market open on Tuesday, with the ASX SPI200 futures adding a further 29 points (+0.42%) in overnight trading. The Australian dollar is currently buying 66.5 US cents.
Commodities
To the commodity markets, oil prices surged higher in trading on Monday, with WTI and Brent Crude gaining 5.13% and 4.20% respectively. The spot gold price retreated from the US$2000 level to close at US$1,956.67 an oz, while base metals prices were mostly firmer, led by Nickel which rallied 4.39%. Iron ore prices lifted higher, gaining 0.50% to US$118.85 a tonne, while bitcoin was weaker, declining -3.1% to US$27,005.
Economic Data
Tuesday 28th March
Aust: Retail Sales Mom (FEB), 11:30 am
US: Goods Trade Balance (FEB), 11:30 pm
Wednesday 29th March
US: CB Consumer Confidence (MAR), 1:00 am
This article was written by Oliver Gordon, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
