Out of the sinking, banks ‘n’ tech lead the way

March 30 (Reuters) – The recovery from this month’s banking shock is gathering momentum and looks like it will roll into Thursday, leaving investors free to pick up where they left off on Wednesday as there are no major economic or policy events on the Asian calendar.

That should mean a positive session for risk appetite and stocks, fueled by hopes that the banking crisis is abating and investors’ reaction to Chinese e-commerce conglomerate Alibaba’s wide-ranging restructuring plans.

Wall Street posted solid gains on Wednesday as volatility slumped to its lowest since the US banking tremors were first felt three weeks ago. While bond yields inched up, bond market volatility also fell and fixed income markets were pretty calm.

The rate-sensitive Nasdaq jumped 1.8% for its best day in two weeks, boosted by positive tech company outlooks. The narrower Nasdaq 100 is now up more than 20% from its December low. Bull market?

First off, banking fears are definitely subsiding. How long this holds or whether this is justified is almost beside the point – after a few weeks of intense volatility and significant losses, financials have stopped bleeding.

The MSCI World financials index is now up three days in a row and the US regional banking index has risen for four straight days, neither of which have been recorded since January.

Investors welcomed Fed Vice Chair for Supervision Michael Barr’s plain-speaking Congressional testimony which concluded on Wetestimony. Barr admitted to lawmakers that officials and regulators had been caught off guard by the banking crisis and said no stone would be left unturned for learning the lessons.

Meanwhile, tech is on a tear, partly thanks to Alibaba. The Chinese conglomerate’s restructuring plans announced this week have been taken as a signal that Beijing’s regulatory crackdown on corporate is ending, propelling its shares higher and boosting investor confidence in prospects for Chinese tech firms.

Alibaba’s US-listed shares (BABA) followed Tuesday’s 14% rally, with a 2% rise on Wednesday, and the Hong Kong-listed shares jumped 12% on Wednesday, leading the Hang Seng Index and other markets in the region higher.

Here are three key developments that could provide more direction to markets on Thursday:

– US GDP (Q4)

– Fed’s Collins, Barkin, Kashkari and Waller all speak

-Germany CPI inflation (March)

(By Jamie McGeever; Editing by Josie Kao)

Wall Street jumps with rosy outlooks from companies

NEW YORK, March 29 (Reuters) – US stocks rallied on Wednesday, with all three major indexes ending up at least 1% as upbeat outlooks from Micron Technology and other companies eased some worries about the health of the economy.

In a sign of potential further strength, the S&P 500 also closed above its 50-day moving average for the first time since March 6, before the onset of the bank crisis, and the CBoe volatility index, Wall Street’s fear gauge, ended at its lowest level since March 8.

Micron (MU) shares shot up 7.2%, boosting the Nasdaq and S&P 500, and leading gains in the PHLX semiconductor index, which closed 3.3% higher.

The memory chip maker late Tuesday forecast a drop in third-quarter revenue in line with Wall Street expectations, while it gave a rosy outlook for 2025 with artificial intelligence boosting sales.

Adding to the optimism, Lululemon Athletica Inc (LULU) jumped 12.7% after an upbeat annual results forecast.

“We had a couple of good reads into the economy from a couple of companies,” said King Lip, chief investment strategist at BakerAvenue Wealth Management in San Francisco.

“Micron is sort of a microcosm of the global economy because their chips go into so many different industries and sectors. If they are optimistic about things in terms of orders, that means the overall economy is doing well.”

The bulk of S&P 500 companies begin reporting on the first quarter in mid-April.

Investors are also trying to gauge whether turmoil in the banking system may be subsiding, and what that may mean for Federal Reserve policy.

The Dow Jones Industrial Average rose 323.35 points, or 1%, to 32,717.6, the S&P 500 gained 56.54 points, or 1.42%, to 4,027.81 and the Nasdaq Composite added 210.16 points, or 1.79%, to 11,926.24.

“People are feeling a little more comfortable with each day that passes since we had the failures,” said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.

The banking turmoil, which started earlier in March with the collapse of Silicon Valley Bank, caused a swift selloff in the sector shares and fueled jitters about the strength of the economy.

On Monday, regional US lender First Citizens BancShares scooped up the assets of Silicon Valley Bank.

Michael Barr, Fed Vice Chair for Supervision, told Congress the scope of blame for Silicon Valley Bank’s failure stretches across bank executives.

Investors are awaiting Personal Consumption Expenditures data on Friday for further clues on inflation. The Fed has been raising interest rates to bring down inflation.

Advancing issues outnumbered declining ones on the NYSE by a 3.86-to-1 ratio; on Nasdaq, a 2.15-to-1 ratio favored advancers.

The S&P 500 posted 9 new 52-week highs and no new lows; the Nasdaq Composite recorded 69 new highs and 135 new lows.

Volume on US exchanges was 10.61 billion shares, compared with the 12.73 billion average for the full session over the last 20 trading days.

(Reporting by Caroline Valetkevitch; additional reporting by Amruta Khandekar and Ankika Biswas; Editing by Dhanya Ann Thoppil and Vinay Dwivedi, and Aurora Ellis)

Dollar rebounds as banking fears fade; yen falls on quarter-end flows

NEW YORK, March 29 (Reuters) – The dollar rose against most major peers on Wednesday, reversing some of its recent declines, and gained sharply against the yen, which was volatile as the end of the Japanese fiscal year approaches.

The dollar index, which measures the currency against six rivals, was 0.18% higher on the day at 102.67, pulling away from the near seven-week low of 101.91 touched late last week.

“The recent failures in the financial sector of the US appear to be contained and the immediate bleeding has stopped,” Helen Given, FX trader at Monex USA, said.

Improving risk sentiment and investor hopes that central banks can once again turn their attention toward fighting inflation was helping support the dollar, Given said.

“Though we see some downside for USD in the second half of the year, dollar strength looks likely to continue on its current path for now,” she said.

Global financial markets were roiled in recent weeks as investors balked at the collapse of two US lenders and the rescue of Credit Suisse (CSGN), with the dollar coming under pressure as worries grew that the market turmoil may leave the Federal Reserve unable to persist with its inflation-fighting interest rate hikes.

Worries, however, have faded this week as investors took solace from First Citizens BancShares’ agreement to buy all of failed lender Silicon Valley Bank’s deposits and loans, and the fact that no further cracks have emerged in global banking in recent sessions.

On Tuesday, Michael Barr, the Fed’s vice chairman for supervision, told the Senate Banking Committee that Silicon Valley Bank’s problems were due to “terrible” risk management, suggesting it could be an isolated case.

“Vice Chair Barr’s testimony to Congress yesterday helped provide USD with a little life raft, easing fears that the Fed may not be able to contain the damage of the last few weeks,” Given said.

The dollar rose to a one-week high against the yen, which remained volatile in the run-up to the end of the Japanese fiscal year on Friday.

“A decent amount of USD/JPY flow today is end of quarter related,” Monex USA’s Given said.

“Traders are concerned with real money outcomes at the moment, but as global risk sentiment continues to improve, JPY as a traditional haven looks less appealing,” she said.

The dollar was 1.37 % higher at 132.71 yen. Elsewhere, the Australian dollar slipped 0.48% to USD 0.6677 after a reading of Australian consumer inflation slowed to an eight-month low, adding to the case for the Reserve Bank to pause its rate hiking campaign next week.

The Canadian dollar was 0.2% higher against its US counterpart, on pace for its third straight session of gains, after Bank of Canada Deputy Governor Toni Gravelle said the bank is ready to step in with support if the banking system comes under severe strain, but now it is not even close to being worried about the health of the financial system.

Bitcoin rose 3.88% to USD 28,329, finding its feet having slid following the problems at the world’s biggest cryptocurrency exchange, Binance, which has been sued by the US Commodity Futures Trading Commission (CFTC).

(Reporting by Saqib Iqbal Ahmed in New York, additional reporting by Alun John in London, Kevin Buckland in Tokyo; Editing by Angus MacSwan, Christina Fincher and Jonathan Oatis)

Gold drops as higher equities, stronger dollar weigh

March 29 (Reuters) – Gold prices slipped on Wednesday as upbeat equities and a stronger dollar weighed but declines in safe-haven bullion have been fairly contained so far, signaling lingering worries about the banking sector.

Spot gold was trading 0.3% lower at USD 1,967.29 per ounce by 2:11 p.m. EDT (1811 GMT). US gold futures settled 0.3% lower at USD 1,966.90.

“It’s risk-on in the equity markets where stocks are going up,” said Bob Haberkorn, senior market strategist at RJO Futures. “There’s been no real new news of any banking issues that we don’t already know about.”

Wall Street’s main indexes gained as worries about stress in the banking sector eased, while Treasury yields reversed course and fell, even as uncertainty still lingered among bond investors over the economic outlook.

The dollar gained about 0.3% against most major peers, pausing its recent declines. A stronger dollar makes bullion more expensive for overseas buyers.

“The marketplace is slowly moving beyond the US and European banking troubles as risk appetite creeps back into the markets. However, veteran market watchers believe it’s too soon for the ‘all clear’ siren regarding the matter,” said Jim Wyckoff, senior analyst at Kitco Metals, in a note.

Investors will look to a key inflation gauge, the core Personal Consumption Expenditures (PCE) price index, expected at the end of the week for more clues on the Fed’s monetary tightening plans.

“We’re going to hover around the USD 2,000 (per ounce) level until we get to the next Fed meeting… The Fed is the driver in the market for precious metals,” Haberkorn said.

Investors priced about a 39% chance of a 25-basis-point hike in May, according to the CME FedWatch tool. Higher rates tend to dull zero-yield gold’s appeal.

In other metals, spot silver gained 0.5% at USD 23.37 per ounce, platinum was up 0.5% at USD 968.41, while palladium added 1.2% at USD 1,436.71.

(Reporting by Deep Vakil in Bengaluru; Editing by Andrea Ricci and Krishna Chandra Eluri)

Oil dips on profit taking, markets debate supply tightness

HOUSTON, March 29 (Reuters) – Oil edged lower on Wednesday in choppy trading as investors looked to pocket profits from two straight days of gains, and as markets debated supply tightness.

Brent crude closed 37 cents, or 0.5%, lower at USD 78.28 a barrel, while West Texas Intermediate crude fell 23 cents, or 0.3%, to USD 72.97.

“The markets are trying to find equilibrium,” said Dennis Kissler, senior vice president of trading at BOK Financial, noting heavy fund buying over the last two days.

On the supply side, worries of tightness after an unexpected draw in US oil stockpiles and a halt to some Iraqi Kurdistan oil exports were partially offset by a smaller-than-expected output cut in Russia.

US crude oil stockpiles fell unexpectedly last week, the Energy Information Administration said, as refineries ramped up operations after maintenance season and US imports fell to a two-year low.

EIA data also showed a larger-than-expected draw in gasoline stocks, implying strong demand heading into the summer season.

“Today’s EIA report was bullish, but the broader story is much more challenged right now,” said John Kilduff, partner at Again Capital LLC in New York, citing economic fears and supply concerns.

News of the surprise drop in inventories came on top of a 450,000 barrels per day (bpd) of crude export halt on Saturday from Iraq’s semi-autonomous northern Kurdistan region following an arbitration decision.

Norwegian oil firm DNO said it had begun shutting down production at its fields in Kurdistan. The company’s Tawke and Peshkabir fields averaged output of 107,000 bpd in 2022, a quarter of total Kurdish exports.

US oil and gas activity stalled in the first quarter as production gains slowed and drillers’ outlooks turned negative, a survey released by the Federal Reserve Bank of Dallas showed.

Supply concern were, however, eased by reports that Russian oil production fell by around 300,000 bpd in the first three weeks of March, less than the targeted cuts of 500,000 bpd.

Meanwhile, markets also awaited clarity on the banking crisis and US Federal Reserve’s plans for rate hike. Oil prices had plunged to a 15-month low on March 20 after global financial markets were roiled as investors balked at the collapse of two US lenders and the rescue of Credit Suisse.

The dollar edged higher against most major peers, pausing its recent declines. A stronger greenback hurts oil demand as crude becomes more expensive for buyers who hold foreign currencies.

(Reporting by Arathy Somasekhar, Additional reporting by Alex Lawler, Yuka Obayashi in Tokyo and Trixie Yap in Singapore; Editing by Marguerita Choy and Alexander Smith)

Bank fears ease but yields curb investors’ enthusiasm

March 29 (Reuters) – An interest rate decision in Thailand and Australian inflation top a light Asian calendar on Wednesday, with broader risk appetite likely to be tempered by a further rebound in US bond yields.

The two-year Treasury yield rose only a few basis points, but the fact that it increased at all following the previous day’s 21 bps surge is notable, and rate-sensitive tech stocks dragged Wall Street into the red.

It is very early days, but there is a growing sense of optimism that the banking shock is abating. Michael Barr, the Fed’s vice chairman for supervision, and FDIC Chairman Martin Gruenberg told lawmakers on Wednesday that depositor funds in US banks are safe and sound.

But this relief is running up what looks like a renewed spike higher in bond yields and borrowing costs, which is dampening risk appetite.

One curiosity is the dollar, weakening again on Tuesday despite the rise in US bond yields. Indeed it mostly struggled to catch a safe-haven bid when the banking stresses were most acute and is now struggling even when US yields are rising.

Asia’s equity spotlight on Wednesday will shine on China’s Alibaba Group 9988.HK after the conglomerate founded by Jack Ma said on Tuesday it plans to split its business into six main units covering e-commerce, media, and the cloud.

The news – a surprising and major revamp as China looks to ease regulatory crackdowns and support private enterprises – sent US-listed shares up 14% on Tuesday, recovering some of the nearly 70% lost since curbs were imposed in late 2020.

On the Asian policy front on Wednesday, the Bank of Thailand is set to implement its fifth consecutive quarter-point rate hike in an attempt to get inflation back within target.

Eighteen of 22 economists polled by Reuters expect the BOT to raise its benchmark one-day repurchase rate to 1.75%.

Inflation has fallen to a 13-month low of 3.79%, but that is still above the BOT’s target range of 1% to 3% and policymakers have signaled that the tightening cycle is not yet over.

Australian inflation figures for February and a raft of data from Vietnam – Q1 GDP and March inflation, trade, and industrial production – will also be released.

Here are three key developments that could provide more direction to markets on Wednesday:

– Thailand interest rate decision (expects +25 bps)

– Australia inflation (February)

– US pending home sales (February)

(By Jamie McGeever; Editing by Josie Kao)

Wall Street ends down with tech; investors assess bank comments

March 28 (Reuters) – US stocks ended slightly lower on Tuesday as investors weighed comments from a top US regulator on struggling banks and sold shares of technology-related names after their recent strong run.

Michael Barr, the Federal Reserve’s top banking regulator, told a Senate panel that Silicon Valley Bank did a “terrible” job of managing risk before its collapse.

Shares of Apple (AAPL) and Microsoft (MSFT) along with other technology-related shares ended down and were among the biggest drags on the S&P 500.

“It’s a little bit of a follow-through from yesterday’s pullback in tech stocks. You’re seeing a little bit of profit-taking,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. “Some of the enthusiasm is waning a little bit.”

The S&P 500 technology index was down 0.5% on Tuesday, extending this week’s declines, but remains up sharply for the quarter.

The KBW regional banking index was down 0.2% on the day. Shares of First Citizens BancShares Inc (FCNCA) were up slightly, a day after the stock rose more than 50% after it said it would acquire the deposits and loans of Silicon Valley Bank.

Bank stocks have sold off sharply in the wake of problems at Silicon Valley and other banks.

The Dow Jones Industrial Average fell 37.83 points, or 0.12%, to 32,394.25, the S&P 500 lost 6.26 points, or 0.16%, to 3,971.27 and the Nasdaq Composite dropped 52.76 points, or 0.45%, to 11,716.08.

“The prospect of stricter regulations for banks with deposits above USD 100 billion is raising the anxiety level for those that are perceived currently to be struggling,” James said.

Treasury yields edged higher, also weighing on tech-focused shares. Yields have climbed from six-months lows hit Friday.

Early in the day, a survey showed US consumer confidence unexpectedly increased in March, but also that Americans are becoming a bit anxious about the labor market.

With the quarter end approaching, investors are looking forward to upcoming bank results, which may give them more details about the health of the sector following the collapse of Silicon Valley and Signature Bank.

Alibaba Group Holding (BABA) jumped 14.3% after the company said it plans to split its business into six main units covering e-commerce, media and the cloud.

After the closing bell, shares of Micron Technology Inc (MU) were up about 1%. It forecast third-quarter revenue in line with Wall Street expectations. Micron closed down 0.9% in the regular session.

Advancing issues outnumbered declining ones on the NYSE by a 1.43-to-1 ratio; on Nasdaq, a 1.28-to-1 ratio favored decliners.

The S&P 500 posted 6 new 52-week highs and no new lows; the Nasdaq Composite recorded 40 new highs and 153 new lows.

Volume on US exchanges was 9.66 billion shares, compared with the 12.75 billion average for the full session over the last 20 trading days.

(Reporting by Caroline Valetkevitch; additional reporting by Shubham Batra, Amruta Khandekar, Sruthi Shankar and Shashwat Chauhan in Bengaluru; Editing by Savio D’Souza, Vinay Dwivedi, and Aurora Ellis)

Gold rises on dollar dip, banking optimism limits gains

March 28 (Reuters) – Gold prices rose on Tuesday, drawing support from a weaker US dollar even as higher bond yields and easing worries about a full-blown banking crisis limited gains for the safe-haven asset.

Following two sessions of declines, spot gold gained 0.7% to USD 1,970.88 per ounce by 1:40 p.m. EDT (1740 GMT). US gold futures settled 1% higher at USD 1,973.50.

The US dollar index retreated about 0.4%, making the greenback-denominated precious metal less expensive for holders of other currencies.

“The weaker US dollar index today is adding to some buying interest in the gold market. However, solid buying interest is being squelched by the fact that the banking crisis, at least for the moment, seems to have stabilized,” said Jim Wyckoff, senior analyst at Kitco Metals.

In the first congressional hearing into the sudden collapse of two US regional lenders and the ensuing chaos in markets, a top US regulator criticized Silicon Valley Bank over its risk management, as lawmakers demanded to know why warning signs of trouble were missed.

“The marketplace is still tentative in that regard, and that’s going to keep risk appetite contained for at least the next couple weeks until we think we’ve moved past this crisis,” added Wyckoff.

Wall Street struggled for direction as investors weighed receding concerns about a banking crisis, while Treasury yields rose amid focus on Federal Reserve’s interest rate trajectory.

In the near term, gold prices could slip to USD 1,933, but the outlook for gold remains bullish with fast approaching peak in US rates and a danger of hitting a recession in coming months, said Ole Hansen, head of commodity strategy at Saxo Bank.

Spot silver rose 0.6% to USD 23.23 per ounce, platinum shed 0.7% to USD 965.19, while palladium was up 1% at USD 1,422.61.

(Reporting by Deep Vakil in Bengaluru; Editing by Marguerita Choy and Shilpi Majumdar)

For battered US bank shares, earnings may make or break

NEW YORK, March 28 (Reuters) – Further relief from the US bank stocks rout may have to wait until banks report quarterly results starting next month, which strategists said could give more details about the sector’s overall health after the recent collapse of some big regional players.

Bank shares rebounded Monday after First Citizens BancShares Inc (FCNCA) said it would acquire the deposits and loans of Silicon Valley Bank, whose meltdown sparked the selloff in the sector earlier this month.

Even so, the S&P 500 bank index is down 16% since March 8, two days before Silicon Valley’s collapse, with the failure of Signature Bank and problems at other banks adding to the turmoil.

The bank index is on track for its biggest monthly percentage drop since the start of the pandemic in 2020, and its price-to-earnings ratio is now at 8.9 compared with 10.61 on March 8, well below its five-year average of 12.12, according to Refinitiv data.

Some say quarterly results could be key to what happens next with bank shares.

“Not until you see the numbers and hear management talk about the balance sheet and their business and what the rest of the year looks like is there potential for things to calm down,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“That could stabilize the industry,” or have the opposite effect, depending on what bank executives say, he said.

Results from the big US banks kick off mid-April when JPMorgan Chase & Co (JPM) and others are due to report.

Among other financials, Jefferies Financial Group (JEF) is expected to report quarterly results after the closing bell Tuesday.

Management teams will be busy preparing balance sheets “to look as good as they can” ahead of the reports, Tuz said.

The bank failures come as S&P 500 companies are headed for their second straight decline in year-over-year quarterly earnings, which would mark the first profit recession for US companies since COVID-19 hit corporate results in 2020.

Analysts expect S&P 500 earnings to fall 4.6% in the first quarter of 2023 from the year-ago period. Earnings declined an estimated 3.2% in the fourth quarter of 2022, based on Refinitiv data as of Friday.

They are forecasting S&P 500 financials to post year-over-year earnings growth in the first quarter of 5.4%, making it among just four sectors whose earnings are expected to climb.

To be sure, concern about the banks has echoed worries about global finances after the US housing market cratered and stoked the global financial crisis in 2007 to 2009.

“It may not be the case where banks report in April and if everything looks fine, then we all go about our merry way,” said Ed Clissold, chief US strategist at Ned Davis Research in Sarasota, Florida. “The market’s too dynamic and money moves too quickly.”

Still, John Carey, portfolio manager at Amundi US in Boston, said credit quality now “is generally better than it was back in the ’07-09 period.”

With earnings, “we’ll have some concrete results to go by,” he said. “Confidence could come back into the market. Some of the companies may be relatively well positioned versus their peers.”

(Reporting by Caroline Valetkevitch; additional reporting by Sinead Carew and Saqib Iqbal Ahmed in New York; Editing by Alden Bentley and Leslie Adler)

Indian mutual funds see debt inflows before tax tweak kicks in – fund managers

MUMBAI, March 28 (Reuters) – Indian mutual funds are seeing a spurt in inflows into debt-oriented schemes ahead of a change in the country’s taxation process effective April 1, several fund managers said on Tuesday.

The country will tax investments in debt mutual funds as short-term capital gains, according to recent amendments to the finance bill – a move that is feared could take away some benefits that have so far made these investments popular.

“We saw inflows coming in on Monday, and more are expected in the next couple of days in target maturity funds, short-term funds as well as corporate bond funds, some inflows are also seen in government bond funds,” said Murthy Nagarajan, head of fixed income investments at Tata Asset Management.

Investments made before March 31 would be taxed as per the current rules, leading to the rush.

At least two mutual fund managers have estimated inflows of around 50 billion rupees (USD 608.35 million) in the system after government’s decision to take away long term tax benefits for debt mutual funds.

This is in stark contrast to outflows from debt schemes that typically take place in March.

“The broader industry is seeing some inflows after the tax announcement, and mutual funds could be seen buying slightly longer duration papers,” said Pankaj Pathak, fixed income fund manager at Quantum Asset Management.
The change could spur growth in bank deposits and lead to lower inflows in some debt mutual funds schemes, according to fund managers.

Fund managers are recommending that retail investors, individuals with high net worth, and corporates invest in debt schemes ahead of the tax change kicking in, market participants said requesting anonymity, as they are not authorised to speak to media.

Money is getting invested in corporate bonds with a tenure of three years or more, as well as government bonds, Tata Asset Management’s Nagarajan added.

Fund managers have said that once the measure is effective, demand for corporate bonds especially with above three-year maturity may weaken. However, not everyone agrees.

“Overall, I do not see this as a big dampener for the entire debt category. Mutual funds provide liquidity, which is not available otherwise,” said Devang Shah, co-head, fixed income at Axis Mutual Fund.

“If someone wants to have benefits of capital gains, mutual funds will continue to be one of the preferred choice.”

(Reporting by Dharamraj Dhutia; Editing by Nivedita Bhattacharjee)

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