A US analyst who called the GFC remains bullish on bank stocks in the wake of First Republic's failure. Plus, investors holding cash like term deposits are being urged to allocate it elsewhere.
Video / NZ Herald
International
US
All three major indices were in the red this morning. The S&P 500 was down 0.4 per cent, the Dow Jones Industrial Average was 0.9 per cent lower and the Nasdaq had declined 0.1 per cent at the time of writing.
US regional banks continue to decline withthe SPDR S&P Regional Banking exchange traded fund down 38.4 per cent year to date and falling 15.2 per cent this week alone.
PacWest was leading the decline, down 43.2 per cent at the time of writing.
PacWest is a Los Angeles-based bank that offers management services to small, middle-market and venture-backed businesses.
A Pacific Western Bank branch in Encino, California. The troubled bank offers management services to small, middle-market and venture-backed businesses. Photo / Morgan Lieberman, Bloomberg via Getty Images
The slide began when the bank announced it was exploring strategic options including a potential sale. Another regional bank, Tennessee-based First Horizon, fell 32.1 per cent after TD Bank announced it was terminating a merger agreement with First Horizon.
Apple reports second quarter earnings after market close today (8am NZT).
Apple hasn’t provided any formal revenue guidance since the beginning of the pandemic. However, the market is expecting a slight decline in revenue largely due to decreases in Mac and iPad sales.
Rest of the World
The European Central Bank announced it will raise interest rates by 25 basis points to 3.25 per cent – the seventh consecutive rate hike. The European Central Bank emphasised that the inflation outlook had been too high for too long and underlying price pressures remain strong.
This increase was the smallest since it started lifting rates in July 2022.
The FTSE 100 declined 1.1 per cent and the STOXX 600 eased off 0.5 per cent.
Commodities
Brent Oil was trading up 1.1 per cent at US$73.10 a barrel at the time of writing and gold was nearing its all-time high trading at US$2,048.0 per ounce (+1.1 per cent).
Bitcoin increased to US$28,841 after gaining 1.1 per cent over night.
The US 10-year Treasury bond shed 5 basis points to a yield of 3.35 per cent.
New Zealand
The NZX 50 rose 0.5 per cent yesterday.
Briscoe Group released first quarter earnings results for its 2023 financial year, with (unaudited) sales increasing to $181 million.
The group expects New Zealand retail to remain highly sensitive to ongoing uncertainty in relation to deteriorating economic conditions, customer sentiment, cost pressures and higher interest rates. The stock closed 1.4 per cent higher.
Fonterra Shareholders’ Fund continued to rally after the results of the global dairy trade auction earlier this week. Skim milk powder, Fonterra’s second-biggest reference product, increased 1.5 per cent, to an average of US$2,787 per Metric Ton. Fonterra Shareholders’ Fund closed up 5.3 per cent on Thursday.
Hallenstein Glasson Holdings increased 8.5 per cent after S&P Dow Jones Indices confirmed it would replace PushPay Holdings in the NZX 50 next Thursday.
The ASX 200 closed 0.1 per cent lower, weighed down by the banking sector with all four major banks in the red.
The decline was led by National Australia Bank (-6.4 per cent) having reported 2023 half year earnings results.
The bank posted a record half-year profit of A$4.1 billion on the back of higher interest rates. Despite the strong profit growth, the result fell short of market expectations.
The bank’s net interest margin was also weaker than expected at 1.77 per cent. The bank announced it will pay a first-half dividend of 83 cents a share, up from 73 cents in the same period last year.
Eyes will now turn to ANZ which reports its interim result today.
Magellan Financial Group traded 3.4 per cent higher despite what appears to be a soft Funds Under Management (FUM) update. The company had net outflows of A$2.4 billion for the month of April, which included net retail outflows of A$0.4 billion and net institutional outflows of A$2.0 billion.
Due to favourable market movements during the month, Magellan’s FUM only declined A$500 million to A$42.7 billion from A$43.2 billion at 31 March.
Australian retail company Super Retail Group, which owns brands such as Supercheap Auto and Macpac, released a third quarter trading update for financial year 2023. The company highlighted a challenging macro environment, conceding that consumer spending is slowing as the cost of doing business is rising. Super Retail Group was the largest decliner on Thursday falling 7.1 per cent.
Coming up today
US: Nonfarm Payrolls, Consumer Credit.
Eurozone: ECB Main Refinancing Rate, Retail Sales.
China: Caixin PMI Composite
Australia: RBA Statement on Monetary Policy, Home Loans, ANZ 1H Earnings, Macquarie Group FY Earnings, Block Q1 Earnings.
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