Today’s Big Picture
Asia-Pacific equity markets finished the day mixed. Japan’s Nikkei advanced 0.33%, India’s SENSEX rose 0.22% and Australia’s ASX All Ordinaries closed near flat, eking out a 0.09% gain. South Korea’s KOSPI declined 0.24%, China’s Shanghai Composite fell 0.44%, Taiwan’s TAIEX dropped 0.53% and Hong Kong’s Hang Seng closed 1.75% lower on a broad decline driven by the Non-Energy Materials sector. European markets are up across the board in midday trading as the global banking picture firmed up over the weekend.
U.S. equity futures point to a positive open later this morning amid a mini-merger Monday that included word that the FDIC arranged a deal for First Citizens (FCNCA) to purchase the loans and deposits of failed Silicon Valley Bank (SIVB). The improving sentiment in the market also reflects weekend comments from the Financial Stability Oversight Council that while some institutions have come under stress, the U.S. banking system remains sound and resilient.
That meshes with other weekend comments from Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, “We know there are other banks that have exposure to long-dated Treasury bonds who have some duration risk, as we call it, on their books… We also know there are a lot of commercial real estate assets in the banking sector and there are some losses that will probably work their way through the banking sector. So that process will take time to fully become clear.” Kashkari also commented that the banking system has a lot of capital to be able to withstand those pressures but reiterated that how much of these banking stresses are leading to a widespread credit crunch remains unknown at this time.
That uncertainty explains reports that U.S. regulators are evaluating expanding an existing emergency lending facility for banks. Paired with the FDIC and First Citizen news, and favorable comments from the Financial Stability Oversight Council, the SPDR S&P Bank ETF (KBE) shares are up more than 3% this morning, giving an added lift to U.S. equity futures.
Data Download
International Economy
Profits earned by China’s industrial firms slumped by 22.9% YoY to CNY 887.2 billion in the first two months of 2023, as factory activity struggled to recover from the slump caused by pandemic disruptions.
Loans to non-financial corporations in the Euro Area rose 5.7% YoY to EUR 5.13 billion in February, down from a 6.1% increase the previous month and slightly below market expectations of 5.8%
The Ifo Business Climate indicator for Germany increased to 93.3 in March, the highest since February 2022, from 91.1 in the previous month, and beating market forecasts of 91. The proportion of businesses who want to raise prices has fallen and 41.6% complained of supply bottlenecks in March while expectations in industrial sectors have fallen slightly. Meanwhile, Ifo economists noted that a winter recession has become more unlikely.
The European Union and Germany reached a deal that will allow some combustion engines beyond 2035 if they run on C02-neutral fuels like the eFuels project currently underway from Porsche, Siemens (SMNEY), and others.
Russian President Vladimir Putin announced his intention to station tactical nuclear weapons in Belarus, comparing the plans to the storage of U.S. warheads in bases across Europe.
Domestic Economy
There are no hard economic data points being released today, but as fuel stockpiles move to multi-year lows ahead of the summer driving season, warnings that U.S. motorists could see a repeat of last summer’s high gasoline prices are emerging .
Markets
Friday saw markets take a slightly more relaxed stance as Consumer Discretionary names declined 0.32% driven mostly by Tesla (TSLA) (-0.94%) and Amazon (AMZN) (-0.59%) which combined to contribute to just over 80% of that sector’s returns. The only other sector that fell was Financials but only by 0.06%, ending the day essentially flat. Real Estate (2.57%) and Utilities (3.12%) saw the biggest gains, propelled ahead by names like American Tower Corp (AMT), up 4.17% and NextEra Energy (NEE), gaining 2.55%, respectively. The Nasdaq Composite advanced 0.31%, the Dow gained 0.41%, the S&P 500 rose 0.56% and the Russell 2000 finished 0.85% higher to close out the week.
Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: -2.74%
- S&P 500: 3.42%
- Nasdaq Composite: 12.97%
- Russell 2000: -1.49%
- Bitcoin (BTC-USD): 65.39%
- Ether (ETH-USD): 46.07%
Stocks to Watch
Before U.S. equity markets begin trading today, Carnival (CCL), and Lithium Americas (LAC) are expected to report their quarterly results.
Chinese search engine Baidu (BIDU) shared pre-recorded videos of its AI-powered chatbot Ernie summarizing financial statements and producing PowerPoint presentations, among other industry-focused capabilities.
Reports suggest Salesforce (CRM) could see another round of job cuts as it continues to focus on improving profitability.
Shares of Blackbaud (BLKB) are moving higher in pre-market trading after Clearlake Capital offered to acquire the company for $71 per share in cash, a 22.8% premium to their closing price last Friday.
Berkshire Grey (BGRY) shares are also starting the week measurably higher following a deal to be acquired by Softbank (SFTBY) for $1.40 per share.
IPOs
Near-term the calendar for such activity looks rather thin. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
PVH (PVH) is slated to report its quarterly results after equities stop trading. Those looking for more on which companies are reporting when should head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Tuesday, March 28
- France: Business Survey – March
- Italy: Business and Consumer Confidence – March
- US: Retail Inventories ex Auto – February
- US: FHFA Housing Price Index – January
- US: S&P Case-Shiller Home Price Index – January
- US: Consumer Confidence – March
Wednesday, March 29
- Germany: GfK German Consumer Climate – April
- European Central Bank Non-Monetary Policy Meeting
- US: Weekly MBA Mortgage Applications
- US: Pending Home Sales – February
- US: Weekly EIA Crude Oil Inventories
Thursday, March 30
- Eurozone: Business and Consumer Survey – March
- Germany: Consumer Price Index – March
- US: Weekly Initial & Continuing Jobless Claims
- US: 4Q 2022 GDP, PCE Price Index – Third Estimate
- US: Weekly EIA Natural Gas Inventories
Friday, March 31
- Japan: Tokyo Core CPI – March
- Japan: Industrial Production, Retail Sales – February
- China: Manufacturing and Non-Manufacturing PMIs – March
- Eurozone: Consumer Price Index – March
- US: Personal Income & Spending, PCE Price Index – February
- US: University of Michigan Consumer Sentiment Index – March
Thought for the Day
“The less you know, the more you believe.” ~ Bono
Disclosures
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
