US equity markets closed higher on Monday, despite futures markets opening weaker on Sunday night, US time. By the close the S&P500 added 34.93 points (+0.89%) to close at 3,951.57, the Dow Jones Industrials gained 1.20% to finish at 32,244.58, while the Nasdaq lagged, gaining just 0.39% to close out the session at 11,675.54.
United States
From the S&P500, gains were well spread across the market with all sectors closing in the green, led by Energy (+2.11%) and materials (+2.00%). Monday’s trading session was relatively calm considering the weekend news that Credit Suisse was acquired by UBS, in what was a relatively rushed takeover, forced through by Swiss regulators. While jitters across the global banking sector have calmed somewhat, we expect there will be further issues in the weeks and months ahead. One of the bigger stories to come out regarding the takeover is the treatment of what are known as Additional Tier 1 bonds (AT1s), which have been written down to zero as a condition of the bank rescue. The issue being is that such bonds rank higher than equity in terms of claims, which begs the question of why equity holders will receive something ahead of bondholders. This is likely to have some unintended consequences which will come to head over the coming months.
Europe
In Europe, and equities were higher across the board, with the Euro Stoxx 50 gaining 1.34%, led by the financials (+2.20%) and materials (+1.95%). The German Dax rallied 1.12%, the French CAC gained 1.27%, while the FTSE100 closed 0.93% higher at 7,403.85.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
Australia
Locally, and the Australian share market has started the week off in the red, with the ASX200 declining 96.29 points (-1.38%) to close at 6,898.51. Energy stocks were sold off heavily, with the sector declining by 3.02%. At the stock level, volatility has increased significantly over recent sessions, with plenty of daily moves close to 10%. On Monday, gold stocks were the top performers, led by Gold Road Resources (GOR, +10.96%), Evolution Mining (EVN, +10.08%), and Perseus mining (PRU, +9.43%). In terms of the laggards, it was Novonix (NVX) and Liontown Resources (LTR) which fell the most, declining by 9.82% and 9.39% respectively. Traders should be expected a higher open on Tuesday, with ASX SPI200 futures gaining 45 points in overnight trading.
Commodities
Crude Oil prices reversed from early session losses to close at US$67.64, at the highs of the trading session. Nevertheless, the broader trend for oil prices remains to the downside, and a rally back above US$72 a barrel would be required to suggest an interim low was in place. Spot gold prices traded above US$2000 an oz, before reversing to close at US$1,978.84 an oz. The Australian dollar lifted slightly against the USD, closing at 67.18 US cents.
Economic Data
Tuesday 21st March
Aust: RBA Meeting Minutes, 11:30 am
Euro Area: ZEW Economic Sentiment Index (MAR), 9:00 pm
Canada: Core Inflation rate mom (FEB), 11:30 pm
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
