JPMorgan Chase acquires First Republic Bank

The Dow Jones Industrial Average inched lower Monday in the wake of the government’s seizure of First Republic over the weekend and the bank’s subsequent sale to JPMorgan Chase.

The Dow dipped 46.46 points, or 0.14 per cent, to end the session at 34,051.70. The S&P 500 ticked down 0.04 per cent to close at 4,167.87. The Nasdaq Composite fell 0.11 per cent, ending at 12,212.60.

JPMorgan Chase shares rose 2.1 per cent after it emerged as the winner of a weekend auction for First Republic. The big bank has acquired all of troubled lender First Republic’s deposits and a “substantial majority of assets.” This deal means that JPMorgan Chase, already one of the biggest US banks, will become even larger.

JPMorgan Chase CEO Jamie Dimon said that the deal resolves much of the fallout in the banking sector that has started since the sudden collapse of Silicon Valley Bank in March.

The SPDR S&P Regional Bank ETF slipped on Monday, declining more than 2 per cent. Zions Bancorp shares shed 3.7 per cent, and PacWest shares tumbled 10.6 per cent.

First Republic reported last week that deposits tumbled more than 40 per cent in the first quarter, triggering further declines in the already struggling stock. Shares have cratered 97 per cent since the start of the year. The stock is halted for trading as of Monday.

Investors are looking to several big-name companies releasing their earnings this week. Tech giant Apple and other headliners Qualcomm and AMD are scheduled to announce their quarterly results.

First Republic’s demise and any potential fallout adds to the tension ahead of the Fed’s interest rate decision on Wednesday. The central bank is largely expected to hike one more time before pausing.

In mining news, Liontown Resources received a competing takeover bid last month. The AFR reports the unnamed bidder has been buying up a stake in Liontown up to A$2.75, suggesting the bid was at around that level. The article notes the new bidder may face the same problem as previous bidder Albemarle, which was unable to elicit support from the Liontown board.

Overnight, S&P500 sectors were mostly mixed. Health led the day, closely followed by Industrials, whilst Energy lagged behind.

China's commodity demand is expected to be as uncertain as the current economic rebound. In China, the overall picture for the steel and copper intensive sectors is uncertain, with some areas of strength, but other sectors still struggling to regain momentum after losing steam during the strict zero-COVID period

Futures

The SPI futures are pointing to a 0.1 per cent fall

Currency

One Australian dollar at 7:10 AM is buying 66.29 US cents..

Commodities

Gold lost 0.40 per cent. Silver added 0.10 per cent. Copper gained 1.20 per cent and oil lost 1.46 per cent.

Figures around the globe

Across the Atlantic, European markets were closed.

In Asian markets, Tokyo’s Nikkei gained 0.92 per cent, while Hong Kong’s Hang Seng and China’s Shanghai Composite were closed.

Yesterday, the Australian sharemarket closed 0.35 per cent higher at 7335.

Ex-dividends

NB Global Corporate Income Trust (ASX:NBI) is paying 1.2179 cents unfranked

Dividends payable

Brickworks (ASX:BKW)
Oz Minerals (ASX:OZL)

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

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