US mid-tier lenders gain on SVB deal, hopes of more gov’t support

March 27 (Reuters) – Shares of several mid-tier US lenders rose sharply on Monday after a buyer emerged for large chunks of embattled Silicon Valley Bank’s deposits and loans, which helped inject some calm into fragile markets.

SVB was the largest bank since the 2008 financial crisis to collapse when California regulators closed it on March 10, sparking a major turmoil in the global banking sector.

Market worries eased on Monday as First Citizens BancShares (FCNCA) agreed to a deal in which unit First–Citizens Bank & Trust Company will assume SVB assets of USD 110 billion, deposits of USD 56 billion and loans of USD 72 billion.

It also included the lender’s purchase of about USD 72 billion of SVB assets at a discount of USD 16.5 billion, the Federal Deposit Insurance Corporation, which is acting as the receiver, said.

The new assets acquired by First Citizens would add 55% to its book value per share and 30% to its earnings per share, KBW estimates.

Shares of First Citizens surged 42%, lifting other US lenders as well.

“There is relief that First Citizen Bank, one of America’s largest family-controlled banks, has come to the rescue,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“A calm of sorts has descended on the banking sector but hopes that this move will see significant stability return may be short-lived.”

Investors are keeping a close eye on First Republic Bank (FRC) as the beleaguered lender attempts to strike potential deals after losing 90% of its market value so far this month.

Its shares jumped 23% after a report said US authorities were considering more support for banks, which could give the embattled regional lender more time to shore up its balance sheet.

Shares in Keycorp (KEY) rose 8.4% and Western Alliance (WAL) 8% and Pacific West Bancorp (PACW) 11.6%. Major US banks JPMorgan Chase & Co (JPM), Citigroup (C) and Bank of America (BAC) also advanced between 1.8% and 4.2%.

Stuart Cole, head macro economist at Equiti Capital, said report of more potential support by the US government is good news. “If such a facility had already been in place, perhaps SVB would not have gone under,” he said.

European banking shares also rose 1.6% as the SVB deal eased some anxiety in the sector following a 3.8% tumble on Friday on worries around Deutsche Bank (DBKGn).

(Reporting by Joice Alves in London; Additional reporting by Medha Singh and Amruta Khandekar in Bengaluru; Editing by Amanda Cooper, Toby Chopra and Arun Koyyur)

Japan’s Nikkei bounces as weaker yen lifts sentiment

TOKYO, March 27 (Reuters) – Japan’s Nikkei index rose for the first time in three days on Monday, with a weaker yen boosting sentiment in the exporter-heavy market, but worries about a global banking crisis weighed on financial shares, capping gains.

The Nikkei ended the day 0.33% higher at 27,476.87, and was at one point in the afternoon up at a two-week high of 27,385.25.

Of the 225 component stocks, 161 were up, while 57 fell and seven were flat.

The broader Topix rose 0.33% to 1,961.84.

Among the Tokyo Stock Exchange’s 33 industry sectors, land transport was the best performer, climbing 1.78%. Banking was the biggest decliner, down 0.54%.

“Amid all the concerns about a banking crisis, for this week I expect the Nikkei to stay heavy,” said Kazuo Kamitani, a strategist at Nomura.

“For the time being, the outlook is for either sideways trading in a narrow range or edging lower,” although “the bottom looks quite firm,” particularly around 27,300, he said.

Uniqlo store operator Fast Retailing Co Ltd was the biggest support for the Nikkei, contributing 28 points to the index’s 92 point advance with a 1% gain.

Automakers were firm after the yen’s pullback from a nearly two-month high to the dollar. Suzuki Motor Corp rallied 1.37%, Subaru Corp added 0.53% and Honda Motor Co Ltd gained 0.62%

At the other end, chipmaking equipment maker Tokyo Electron Ltd was the biggest drag, erasing 43 index points with a 2.5% slide, tracking declines from Friday in US peers.

Concordia Financial Group Ltd was Nikkei’s worst-performing financial stock, losing 1.68%. Chiba Bank Ltd lost 1.2% and Shizuoka Financial Group Inc declined 1.06%. Sumitomo Mitsui Financial Group Inc fell 1.01%.

(Reporting by Kevin Buckland; Editing by Varun H K)

Easing banking crisis fears give Australia shares modest lift

March 27 (Reuters) – Australian shares eked out modest gains on Monday, as investors assessed moves made by global authorities to rein in lingering concerns over a turmoil in the global banking system, while a deal for troubled Silicon Valley Bank brought in some relief.

The S&P/ASX 200 index finished 0.1% higher at 6,962.0, after gaining as much as 0.5% earlier in the session.

The Federal Deposit Insurance Corporation (FDIC) confirmed on Monday First Citizens BancShares Inc will acquire all of Silicon Valley Bank’s deposits and loans from the regulator, bringing some respite to markets which have been roiled by worries of a credit crunch and wider banking crisis.

In Australia this week, investor focus would be on retail sales data and monthly inflation indicator for February- data sets likely to help shape expectations for the Reserve Bank of Australia’s policy meeting on April 4.

“This week attention will again be on the banking sector as markets continue to press for banking pressure points and…on the spillover effects of the banking crisis on credit flow, growth, inflation, and the path of central bank policy,” IG analyst Tony Sycamore said.

In Sydney, financials pared gains to finish 0.2% lower, after rising 0.8% earlier in the session, with two of the “Big Four” banks adding between 0.1% and 0.7%.

Meanwhile, the country’s lower house passed an emissions reduction plan with curbs on some new gas and coal investments and a cap on total greenhouse gas emissions from Australia’s biggest polluters.

Energy firms skidded 2.3% and were the only major laggards on the benchmark, with sector majors Woodside and Santos down 3.4% and 1.6%, respectively.

“Investors are seeing the updated legislation as negative- pointing to the fear that the sector is gonna take a hit in terms of gas investments and that’s why we’re seeing a weakness across the energy sector today,” said Josh Gilbert, market analyst at eToro.

The country’s top fuel supplier Ampol was among the top losers on the benchmark, falling up to 2.3% after it flagged a hit to gasoline production at its refinery in Queensland.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index edged up 0.3% to 11,612.9 points.

(Reporting by Riya Sharma in Bengaluru; Editing by Nivedita Bhattacharjee)

Oil rises over USD 3 on Kurdistan export halt, banking optimism

HOUSTON, March 27 (Reuters) – Oil prices rose more than USD 3 on Monday as a halt to some exports from Iraq’s Kurdistan region added to worries about oil supplies while a US banking acquisition eased worries that financial turmoil could hurt the economy and curtail fuel demand.

Brent crude futures settled up USD 3.13, or 4.2%, at USD 78.12 a barrel. West Texas Intermediate US crude closed USD 3.55, or 5.1%, higher at USD 72.81.

Brent gained 2.8% last week while WTI rebounded by 3.8% as jitters in the banking sector eased.

Prices received a lift as Turkey stopped pumping crude from Kurdistan via a pipeline following an arbitration decision that confirmed Baghdad’s consent was needed to ship the oil. The exports amount to about half a percent of global oil supply, or 450,000 barrels per day (bpd).

Loss of oil supplies from Kurdistan could offset the impact of Russian production and supplies finding their way to market, said John Kilduff, partner at Again Capital LLC in New York. It also could force production cuts in the Kurdistan region.

“Now we have this new wrinkle here…. It’s production that we really can’t afford to lose,” Kilduff said, adding that the loss of supply would amplify any other future force majeure or production outages.

First Citizens BancShares Inc (FCNCA) said it will acquire deposits and loans of failed Silicon Valley Bank (SIVB), closing one chapter in the crisis of confidence that has roiled financial markets.

“Oil prices are edging higher extending gains from the previous week as investors weighed up efforts by the authorities to calm concerns regarding the global banking system,” said Fiona Cincotta, senior financial markets analyst at City Index.

There are also hopes for extra support for bank funding after reports that US authorities were in early deliberations about expanding emergency lending facilities.

Wall Street equities gained as the banking deal offered a respite after weeks of turmoil.

Oil prices also drew support from worries of geopolitical turmoil after Russian President Vladimir Putin’s plans to station tactical nuclear weapons in Belarus, one of Russia’s most pronounced nuclear signals yet.

Russian Deputy Prime Minister Alexander Novak has said Moscow is close to achieving its target of cutting crude output by 500,000 barrels per day (bpd) to about 9.5 million bpd.

Still, Russia’s crude exports are expected to remain steady as it cuts refinery output in April, data from industry sources and Reuters calculations showed on Friday.

On the demand side, China’s crude oil imports are expected to rise 6.2% in 2023 from last year’s level to 540 million tons, according to an annual forecast by a research unit of China National Petroleum Corp on Monday.

Investors were waiting for US inventory data. US crude oil stockpiles were seen rising about 200,000 barrels last week, a preliminary Reuters poll showed on Monday.

The American Petroleum Institute (API), an industry group, will publish its inventory data at 4:30 p.m. EDT on Tuesday and the US Energy Information Administration at 10:30 a.m. on Wednesday.

(Reporting by Arathy Somasekhar, additional reporting by Noah Browning in London, Mohi Narayan in New Delhi and Florence Tan in Singapore; Editing by Jason Neely, David Goodman, Ken Ferris and David Gregorio)

Gold drops as investors digest SVB deal amid banking risks

March 27 (Reuters) – Gold prices fell for a second straight session on Monday as the U.S. dollar firmed, while investors weighed measures taken by authorities to assuage fears of a crisis in the global banking sector.

Spot gold was down 0.5% at USD 1,967.86 per ounce, as of 0632 GMT. US gold futures slipped 0.8% to USD 1,968.90.

The dollar index rose 0.2% and made bullion less affordable for overseas buyers.

First Citizens BancShares Inc will acquire all of Silicon Valley Bank’s deposits and loans from the Federal Deposit Insurance Corporation. The news cast an uneasy calm over fragile markets on Monday.

“Markets continue to adopt a cautious stance… On net, the mix of growth worries, lingering concerns of banking stresses could benefit safe-haven proxies such as USD, JPY and gold in the interim,” said OCBC FX strategist Christopher Wong.

Gold had risen above the USD 2,000 mark after the sudden collapse of two US lenders, but has since pulled back from those levels after rescue measures by authorities, including UBS’ takeover of ailing Credit Suisse.

However, worries persisted that regulators are yet to contain the worst shock to the banking sector since the 2008 financial crisis after shares of Deutsche Bank plunged on Friday.

Recent stress in the sector and the possibility of a follow-on credit crunch brings the United States closer to recession, Minneapolis US Federal Reserve President Neel Kashkari said.

The threat of a recession has resulted in investors increasing their allocation to the precious metal in droves, ANZ said in a note.

Markets are pricing in a 70% chance of the Fed standing pat on interest rates at its May meeting, according to the CME FedWatch tool.

While gold is considered a hedge against inflation and economic uncertainties, higher interest rates discourage investment in non-yielding bullion.

Spot silver shed 1% to USD 22.99 per ounce, platinum lost 0.7% at USD 970.51 and palladium slipped 0.9% to USD 1,402.79.

(Reporting by Kavya Guduru in Bengaluru; Editing by Sherry Jacob-Phillips and Sonia Cheema)

Philippine minister says pause in rate rises likely at next bank meeting

MANILA, March 26 (Reuters) – Philippines Finance Secretary Benjamin Diokno said on Sunday he believed that the central bank was leaning towards a pause in interest rate rises at its next monetary policy meeting scheduled for May.

“Non-monetary measures to ease inflation could address the problem more effectively”, including those already adopted by fiscal authorities, Diokno said in a statement.

The Bangko Sentral ng Pilipinas’ decided on Thursday to continue fighting inflation with a rate increase, although at the slower pace of 25 basis points (bps) to 6.25%.

BSP Governor Felipe Medalla has said the central bank’s next policy decision move would depend largely on how consumer prices behave in the coming months.

The latest BSP rate increase brought to 425 bps the total tightening it has delivered since May, the full impact of which Diokno said had yet to be absorbed by the economy, considering that monetary policy often works with a long lag.

“In my view, the monetary authorities have done enough. And monetary policy is not the only game in town. Besides … monetary policy works with a long lag,” said Diokno, who sits as a member of the seven-man monetary board of the central bank.

(Reporting by Enrico Dela Cruz; Editing by Michael Perry)

US recap: Dollar and yen up vs euro amid banking stress risk flows

March 24 (Reuters) – The dollar and yen rose against the euro and most major currencies on Friday in a pre-weekend climax of risk-off flows tied to global banking stress and tightening central banks.

USD/JPY enjoyed a late rebound after stocks and Treasury yields recovered from early losses.

EUR/USD was down 0.66% in afternoon trading, with its recovery from Friday’s 1.0714 lows on EBS by the 10-day moving average limited by the sharp rebound in Treasury yields.

Selling pressure also persisted as European bank stocks fell far more than those in the US, led by an 8.5% drop in Deutsche Bank and a 2% dip in the Invesco AT1 bond ETF. UBS, amid a government backed rescue of Credit Suisse, fell 3.55%.

The early scramble into safe havens also reflected pre-weekend derisking, which peaked early in the US session and then retreated.

Above-forecast US March PMI readings encouraged the retreat in risk aversion from its extremes, as did comments by St. Louis Federal Reserve president James Bullard, who said he saw an 80% chance of financial stress abating and the discussion shifting back to inflation.

Friday’s three Fed speakers indicated Wednesday’s 25bp rate hike to fight inflation was justified because financial stability was not jeopardized by failures at certain banks that were not relevant to the banking system as a whole.

As it stands, 2-year Treasury yields, which encapsulate the likely path of Fed policy over that period, fell an incredible 153bp from March 8’s closing peak to Friday’s intraday day low, with yields up roughly 20bp from Friday’s lows ahead of the close.

USD/JPY recovered virtually all its early risk-off losses, but a rebound to reset oversold prices and Treasury yields will likely serve up a new selling opportunity.

Sterling fell 0.5%, partly recovering from earlier risk-off losses.

US March ISMs and payrolls data awaited on April 3, 5 and 7.

(Editing by Burton Frierson; Randolph Donney is a Reuters market analyst. The views expressed are his own.)

Gold eases from key USD 2,000 level as dollar firms

March 24 (Reuters) – Gold dipped on Friday in a volatile week that saw bullion prices north of the key USD 2,000 figure as bank contagion fears bolstered both safe-haven demand and bets on a pause in Federal Reserve rate hikes.

The US dollar rose about 0.5%, making the greenback-priced gold more expensive among overseas buyers on Friday.

Spot gold fell 0.8% to USD 1,977.01 per ounce by 2:34 p.m. EDT (1834 GMT), after it rose to USD 2,002.89 earlier in the session. US gold futures slipped 0.6% to settle at USD 1,983.80.

A somewhat firmer dollar and a rebound in equity markets and risk appetite are probably what has driven gold lower, said Bart Melek, head of commodity markets strategy at TD Securities. But bullion was likely to get continued support from big macro developments, Melek said.

Rescue measures for struggling banks eased contagion fears earlier in the week, putting gold on course for its first weekly decline in four, down about 0.5%, despite having climbed to its highest in a year above USD 2,000 on Monday.

But banking shares were trounced again on Friday, with European giants Deutsche Bank and UBS knocked by worries that regulators and central banks have yet to contain the worst shock to the sector since the 2008 financial crisis.

“Any concern that pops up about US banks being undercapitalized is going to be a factor for gold to rise,” said Bob Haberkorn, senior market strategist at RJO Futures.

Fed officials said there was no indication financial stress was worsening as they gathered at a policy meeting this week, a fact that allowed them to stay focused on lowering inflation with another interest rate increase.

The US central bank this week raised rates by an expected quarter of a percentage point but signaled it was on the verge of pausing.

Silver eased 0.1% to USD 23.07, platinum fell 0.7% to USD 977.776, and palladium dropped 0.7% to USD 1,420.40.

(Reporting by Seher Dareen, Bharat Govind Gautam and Rahul Paswan in Bengaluru; Editing by Kirsten Donovan and Shilpi Majumdar)

European stocks fall as Deutsche Bank sparks another bank rout

March 24 (Reuters) – A steep sell-off in banking stocks hit European indexes on Friday as worries about the stability of the financial sector intensified, with Deutsche Bank tumbling as cost of insuring the German bank’s debt against the risk of default jumped to a more than four-year high.

The pan-European STOXX 600 index fell 1.4%, but still posted a weekly gain supported by a sharp recovery earlier this week.

“Post what happened to Credit Suisse last weekend, investors don’t want to hold on to positions that have any concern around them over the weekend, getting out of such positions is probably what we’re seeing with Deutsche Bank,” said Paul van der Westhuizen.

“And, of course, there is money to be made if you’re on the right side of an over-reaction in the stocks.”

Deutsche Bank (DBKGn) tumbled 8.5%, after a sharp jump in the cost of insuring against the risk of default. The German heavyweight said that it would redeem USD 1.5 billion of Tier 2 notes due in 2028.

“Deutsche Bank has taken the place of Credit Suisse really as being the next sort of weakest link in the chain, possibly unjustly,” said David Goebel, associate director of investment strategy at Evelyn Partners.

Shares of UBS Group AG (UBSG) and Credit Suisse AG (CSGN) fell 3.6% and 5.2%, respectively, after Bloomberg News reported they were among the banks under scrutiny in a US Department of Justice (DOJ) probe into whether financial professionals helped Russian oligarchs evade sanctions.

European banks fell 3.8% and were set for their third week of declines, after the failure of US mid-sized lenders and the turmoil at Credit Suisse highlighted growing risks to banks in the wake of tightening financial conditions.

Austria’s Raiffeisen Bank International (RBIV) slid 7.9% after Reuters reported the European Central Bank was pressing the bank to unwind its highly profitable business in Russia.

European Union leaders and the ECB sought to calm market jitters by presenting a united front on the banking sector, saying EU lenders were well capitalized and liquid thanks to lessons drawn after the 2008 Lehman Brothers collapse.

A series of interest rate hikes from the Federal Reserve and other central banks in Europe this week also added to fears of tightening financial conditions even as the US central bank signaled a pause in its hiking cycle.

The STOXX 600 is up just 3.5% on a year-to-date basis, having risen as much as 10% at one point. The US benchmark S&P 500, meanwhile, is up 2.9% so far this year.

An S&P Global survey showed business activity across the eurozone unexpectedly accelerated this month as consumers splashed out on services but weakening demand for manufactured goods deepened the downturn in the factory sector.

(Reporting by Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru; editing by Eileen Soreng, Anil D’Silva and Alex Richardson)

Japanese shares end lower on stronger yen, worries about financial system

TOKYO, March 24 (Reuters) – Japanese shares ended lower on Friday, as a stronger yen raised concerns about denting domestic companies’ earnings, while investors continued to remain concerned about a wider banking crisis.

The Nikkei index slipped 0.13% to close at 27,385.25 and lost 0.19% for the week.

The broader Topix edged down 0.10% to 1,955.32 and posted a 0.2% weekly loss.

“The stronger yen was the reason for the decline in the market today, while investors are still assessing the turmoil in the banking sector,” said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

The yen touched a six-week high against the dollar on Friday as traders continue to evaluate the US Federal Reserve’s hints of a pause to interest rate hikes.

Risk appetite has been hurt after the failure of US-based Silicon Valley Bank and Swiss lender Credit Suisse’s liquidity issues raised concerns about a global financial crisis.

Toyota Motor Corp. fell 0.17% and Honda Motor Co Ltd lost 0.62%.

Uniqlo owner Fast Retailing lost 1.01% to drag the Nikkei down the most. Medical equipment maker Terumo Corp slipped 2.79% and robot maker Fanuc Corp fell 0.76%.

Oil explorers fell 1.27% to become the worst performers among the 33 industry sub-indexes on the Tokyo Stock Exchange after oil prices fell.

Financials were weak, with the banking index slipping 0.77% and insurance index losing 0.93%.

Insurer Tokio Marine Holdings Inc fell the most among the top 30 core Topix companies, with a 1.19% drop, followed by Mitsubishi UFJ Financial Group, which lost 1.10%.

Chipmaking equipment maker Tokyo Electron gained 1.83% to provide the biggest support to the Nikkei index. Silicon-wafer maker Shin-Etsu Chemical rose 2.23%.

Toshiba Corp jumped 4.2% after its board accepted a buyout offer from a group led by private equity firm Japan Industrial Partners.

Of the Nikkei components, 69 stocks rose and 149 fell, while seven stocks were flat.

(Reporting by Junko Fujita; Editing by Varun H K and Sonia Cheema)

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