Our head of investment rounds up the morning's big news.
Focus turns to the latest euro area inflation data at 10am which is expected to remain at around 8.5%, a day after the ECB raised rates by 50 basis points despite the market turmoil.
Overnight in Asia markets closed higher, with the Hang Seng leading the gains up by more than 1.6%. After a strong finish on Wall Street with the tech-heavy Nasdaq closing up almost 2.5%, US futures are pointing to a higher open as markets attempt to regain ground after the last week’s volatility.
Oil is rebounding but is on track for its biggest weekly decline of 2023. Saudi Arabia’s energy minister met with Russia’s deputy prime minister Alexander Novak to discuss the volatility in the oil markets and OPEC+’s commitment to balancing the market. The Swiss National Bank’s intervention to provide a lifeline to Credit Suisse, which lifted financial markets, also helped to buoy oil prices amid a diminished risk of financial contagion and a significant economic impact.
FIRST REPUBLIC BANK
The largest Wall Street banks including JPMorgan Chase & Co (NYSE:JPM), The Goldman Sachs Group Inc (NYSE:GS), and Morgan Stanley (NYSE:MS) have grouped together to provide $30 billion for First Republic Bank (NYSE:FRC) to support the bank and help stem wider financial contagion.
The stock surged 10% yesterday but is still down 50% over the past five trading days. Pre-market the stock is reversing gains, shedding around 10%, suggesting the package does not go far enough to alleviate the risks. Plus First Republic announced plans to suspend its dividend, with the reduced investor pay out also weighing on shares.
Following the demise of Silicon Valley Bank there have been worries that First Republic could be next. Turmoil at Credit Suisse Group AG (SIX:CSGN) has added to the sense of unease within the banking sector. Over the past week banks have borrowed $300 billion from the Federal Reserve, around half of which was for SVB Financial Group (NASDAQ:SIVB) and Signature Bank (NASDAQ:SBNY).
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