US bank deal allays systemic fears

March 28 (Reuters) – Asian markets could rebound on Tuesday from their sluggish start to the week, after a deal to buy the assets of stricken US bank Silicon Valley Bank (SVB) prompted a relief rally in financials and allayed fears of deeper systemic stress.

Regional US lender First Citizens BancShares said it will take on SVB’s assets of USD 110 billion, deposits of USD 56 billion and loans of USD 72 billion, and investors liked what they heard.

The S&P 500 banking index jumped 3% – First Citizen shares leapt 54% – the MSCI global financials index rose 1.2% and euro zone banks rose 1.7%.

Systemic banking crisis fears were further allayed by Fed Vice Chair for Supervision Michael Barr, who plans to tell lawmakers on Tuesday that regulators are committed to ensuring all US bank deposits are safe, according to prepared remarks.

Brent crude’s rise of over 4% was another indication that investors may be recovering their mojo in the final week of a torrid quarter. All good news, right?

Yes, but there are reasons for caution, and not just because banking crises are rarely resolved in days or weeks.

The surge of more than 20 basis points in the two-year US Treasury yield was down due to a poorly received auction as much as due to confidence that banks have turned a corner. The notes sold at a high yield of more than two basis points above where they had traded before the auction, and demand was the weakest since November 2021.

Treasury’s sale of USD 43 billion five-year notes on Tuesday and USD 35 billion of seven-year notes on Wednesday will be worth monitoring.

And crypto shares fell after the Commodity Futures Trading Commission said it had sued crypto exchange Binance and its CEO and founder Changpeng Zhao for operating an “illegal” exchange and a “sham” compliance program.

Bitcoin fell 3.5%, the third time in a week it has lost 3% or more in a single day.

There are no central bank policy decisions on Tuesday, but investors can expect a slew of headlines from central bank officials around the world to hit their screens.

In Asia, Bank of Japan governor Haruhiko Kuroda gives a speech, and finance ministers and central bank governors of the ASEAN nations attend a three-day summit in Bali. European Central Bank and Bank of England chiefs Christine Lagarde and Andrew Bailey head a raft of European policymaker events.

And the Fed’s Barr delivers his “Bank Oversight” testimony to lawmakers.

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

– Australia retail sales (February)

– ASEAN finance chiefs summit

– Fed’s Barr speaks on banking sector oversight

(By Jamie McGeever; Editing by Josie Kao)

S&P 500 ends up slightly; SVB deal lifts bank shares

NEW YORK, March 27 (Reuters) – The S&P 500 ended slightly higher on Monday as a deal for Silicon Valley Bank’s assets helped to boost bank shares, while a decline in technology-related stocks limited the day’s gains.

The S&P 500 banks index rose 3.1%, while the KBW regional banking index ended up 0.6%.

JPMorgan Chase & Co (JPM) shares climbed 2.9% and Bank of America (BAC) added 5%. They were among stocks giving the S&P 500 its biggest boost on Monday.

Shares of First Citizens BancShares Inc (FCNCA) shot up more than 50% after it said it would acquire the deposits and loans of Silicon Valley Bank, which failed earlier this month in the largest bank collapse since the 2008 financial crisis.

Also, shares of First Republic Bank (FRC) were up 11.8% after Bloomberg reported US authorities were considering more support for banks, which could give the struggling First Republic more time to shore up its balance sheet.

Tech-related growth shares were lower, however, and the Nasdaq ended down on the day.

“There’s still a lot going on in the financial sector, and it’s actually good news today,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

But tech and growth stocks have “had a very strong quarter, so there may be some profit-taking as we head into the end of the quarter.”

The Dow Jones Industrial Average rose 194.55 points, or 0.6%, to 32,432.08, the S&P 500 gained 6.54 points, or 0.16%, to 3,977.53 and the Nasdaq Composite dropped 55.12 points, or 0.47%, to 11,768.84.

Shares of Apple AAPL.O were down 1.2%. The S&P 500 technology index is up more than 16% for the quarter so far.

Crypto shares were also down Monday after the Commodity Futures Trading Commission said crypto exchange Binance and its CEO and founder Changpeng Zhao have been sued by the CFTC for operating an “illegal” exchange and a “sham” compliance program.

Among other stock gainers, Walt Disney (DIS) shares ended up 1.6% after the company began 7,000 in layoffs announced earlier this year.

Advancing issues outnumbered declining ones on the NYSE by a 2.57-to-1 ratio; on Nasdaq, a 1.44-to-1 ratio favored advancers.

The S&P 500 posted 6 new 52-week highs and no new lows; the Nasdaq Composite recorded 56 new highs and 128 new lows.

Volume on US exchanges was 10.32 billion shares, compared with the 12.9 billion average for the full session over the last 20 trading days.

(Reporting by Caroline Valetkevitch in New York and additional reporting by Amruta Khandekar and Ankika Biswas; Editing by Chizu Nomiyama and Aurora Ellis)

Gold slips more than 1% as risk appetite improves

March 27 (Reuters) – Gold prices fell more than 1% on Monday as worries over a crisis in the banking sector subsided, prompting investors to scale back safe-haven trades in favour of riskier assets like equities and crude oil.

Spot gold dropped 1.2% to USD 1,952.95 per ounce by 2:10 p.m. EDT (18:10 GMT). US gold futures settled 1.5% lower at USD 1,953.80.

There is a sense of calm in the markets and a flight back into some of the risk-on assets, and all the safety trades like gold are starting to sell off, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

A buyer for Silicon Valley Bank’s deposits and loans helped Wall Street’s main indexes open higher, sending gold further below the USD 2,000 mark breached last week.

“Much of the rally on the gold market was really short-covering,” Streible said, adding that prices were likely going to continue to come under pressure.

Recent banking sector stress and the possibility of a follow-on credit crunch bring the US closer to recession, Minneapolis Fed president Neel Kashkari said. However, US Federal Reserve officials said there was no indication financial stress was worsening.

“After kissing the psychological USD 2,000 level last week, bears exploited this resistance to attack. Appetite for the precious metal has also been dampened by a stabilising dollar and mixed signals on monetary policy from the Fed,” said Lukman Otunuga, senior research analyst at FXTM.

Last week, the Fed indicated it was on the verge of pausing further increases in borrowing costs, boosting non-yielding gold’s appeal.

On the physical front, China’s February net gold imports via Hong Kong nearly tripled from the previous month.

Spot silver fell 1.1% to USD 22.98 per ounce, platinum eased 0.6% to USD 970.81, and palladium dipped 0.2% to USD 1,412.97.

(Reporting by Bharat Govind Gautam, Deep Vakil and Ashitha Shivaprasad in Bengaluru; Editing by Krishna Chandra Eluri and Emelia Sithole-Matarise)

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.)

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