US Treasury Secretary reassures intervention to protect smaller banks
Stocks rose on Tuesday as traders became optimistic on the financial sector’s outlook following Treasury Secretary Janet Yellen’s reassurances to safeguard against further banking crises.
Yellen says the US will intervene if needed to protect smaller banks. The US government is ready to act “if smaller institutions suffer deposit runs that pose the risk of contagion”, the Treasury secretary said.
The Dow Jones Industrial Average gained 0.98 per cent. Meanwhile, the S&P 500 and Nasdaq Composite gained 1.3 per cent and 1.6 per cent, respectively.
Regional banks surged Tuesday, led by First Republic. The beaten-down bank jumped 34.8 per cent, a day after losing 47 per cent. The SPDR Regional Banking ETF gained 6 per cent.
Wall Street is looking toward the Federal Reserve’s announcement on its monetary policy tightening path on Wednesday afternoon.
The failures of Silicon Valley Bank and three other lenders over the past 11 days has put the Fed in a difficult position as it prepares to deliver tomorrow one of the most consequential decisions on interest rates of the Jay Powell era.
The central bank chief was already under fire for being too slow to tighten rates and bring inflation under control without pushing the economy into recession. Now, a banking crisis hands the central bank a third crucial challenge: how to steer the banking sector out of the predicament and restore confidence in the sector.
A new academic study calculates that there may be as many as nearly 190 lenders at risk of failure.
Further to the Credit Suisse demise a number of bondholders said Tuesday that they were considering legal action after $17 billion of the bank’s additional tier-one (AT1) bonds were wiped out as part of its emergency sale to UBS. Debt has always ranked higher than equity in the pay out order, with the Swiss Regulator’s decision providing a return to equity holders over bond holders.
In tech news, Amazon plans to lay off another 9,000 workers. The cuts add to the 18,000 layoffs announced in recent months, and represent less than 3 percent of the company’s corporate work force.
Overall, Overnight, most S&P500 sectors closed higher. Energy was the standout, closing 3.45 per cent higher, whilst utilities was the biggest laggard
Futures
The SPI futures are pointing to a 0.9 per cent gain.
Currency
One Australian dollar at 7:35 AM is buying 66.71 US cents..
Commodities
Iron ore futures are pointing to a 0.5 per cent fall.
Gold lost 1.96 per cent. Silver fell 0.76 per cent. Copper rose 1.32 per cent and oil gained 2.5 per cent.
Figures around the globe
Across the Atlantic, European markets closed higher. London’s FTSE added 1.8 per cent, Frankfurt also gained 1.8 per cent while Paris closed 1.4 per cent higher.
In Asian markets, Tokyo’s Nikkei was closed, Hong Kong’s Hang Seng added 1.4 per cent while China’s Shanghai Composite closed 0.6 per cent higher.
Yesterday, the Australian sharemarket closed 0.8 per cent higher at 6,955.
Ex-dividends
AngloGold Ashanti (ASX:AGG) is paying 4.2585 cents unfranked
Briscoe Group (ASX:BGP) is paying 14.9435 cents unfranked
Fonterra Share Fund (ASX:FSF) is paying 7.904 cents unfranked
Genesis Energy (ASX:GNE) is paying 8.008 cents unfranked
Kelly Partners Group (ASX:KPG) is paying 0.3993 cents fully franked
Myer Holdings Ltd (ASX:MYR) is paying 8 cents fully franked
Pacific Smiles Group (ASX:PSQ) is paying 0.35 cents fully franked
Seek (ASX:SEK) is paying 24 cents fully franked
Supply Network (ASX:SNL) is paying 20 cents fully franked
Service Stream (ASX:SSM) is paying 0.5 cents fully franked
Dividends payable
Advance ZincTek (ASX:ANO)
Heartland Group Holdings (ASX:HGH)
MA Financial Group (ASX:MAF)
Medibank Private (ASX:MPL)
NZME (ASX:NZM)
Pental (ASX:PTL)
Regal Partners (ASX:RPL)
Shine Justice (ASX:SHJ)
Sims (ASX:SGM)
Sonic Healthcare (ASX:SHL)
Steadfast Group (ASX:SDF)
TPC Consolidated (ASX:TPC)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Disclaimer
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