Dow futures 0.06% at 31870
S&P futures +0.6% at 3934
Nasdaq futures +0.1% at 12518
FTSE +0.46% at 7363
Dax +0.5% at 14850
Banking sector tensions remain
US futures are showing modest gains, after erasing an earlier decline, as investors continue to digest the latest developments in global banking stocks, including liquidity support by major central banks and consolidation in the banking sector.
Major central banks across the globe led by the Fed announced an emergency liquidity operation through standing US dollar swap line arrangements, which is designed to ease the strain on the global banking system.
Investors are also digesting the news that UBS bought Credit Suisse for CHF 3 billion. However, the buyout, well below the market price, resulted in $17 billion being lost by Credit Suisse junior bondholders raising concerns across the sector.
US regional banks are still under pressure as they rush to shore up their deposits following the collapse of SVB bank earlier this month.
The focus on the banking sector comes as investors also look ahead to the FOMC rate decision on Wednesday, where the Fed is expected to raise interest rates by 25 basis points, but this is by no means a done deal.
First Republic Bank is falling sharply lower pre-market after another rating agency downgrade. The S&P500 downgraded its rating on the bank and reports that it is looking to raise capital despite deposits injection last week.
NVIDIA is in focus as the three-day developer conference is set to kick off and could build enthusiasm and show off its latest advancements in generative AI, cloud computing and more.
Where next for the S&P 500?
The S&P rebounded from 3808 in March low, pushing back over the year-old falling trend line and the 200 sma. However, the price failed at the resistance of the 100 sma at 3957 and rebounded lower. Today the price found support on that same year-long falling trendline resistance turned support at 3865. The RSI remains below 50, which in addition to the fall below the 200 sma keeps sellers hopeful of further downside. A break below 3865 is needed to extend the selloff to 3808. Meanwhile, buyers have more work on their hands, with a rise above the 200 sma at 3930 needed to bring the 100 sma at 3963 into focus. A rise above here creates a higher high and exposes the 50 sma at 4016.
FX markets – USD falls, EUR, GBP rise
The USD is falling as investors continue to digest the latest developments surrounding the global banking crisis and as they look ahead the fed rate decision on Wednesday. The stress in the financial sector has raised the prospect of the Fed cutting rates by the end of the year.
EUR/USD is rising, capitalising on renewed weakness in the US dollar amid persistent fears over the global banking crisis, which is weighing heavily on treasury yields. man PPI cooled by less than expected in February at 15.8% YoY, down from 17.6% in January, but above forecasts of 14.5%. ECB’s Lagarde is due to speak today and investors will be looking closely for any clues over the future path for interest rates after the central bank hiked rates by 50 basis points last week.
GBP/USD is rising as the USD continues to struggle and as investors look ahead to the release of UK inflation data tomorrow and the Bank of England rate decision on Thursday.
EUR/USD +0.39% at 1.0701
GBP/USD +0.32% at 1.2221
Oil tumbles further
Oil fell over 10% last week and is trending lower again at the start of the new week, hitting its lowest level since 2021 on banking fears. Investors continue to fret that the unfolding banking crisis could result in a recession, hurting the oil demand outlook.
The slide in oil comes even as central banks such as the Fed and the ECB pledged to enhance liquidity and support other banks, in a move which has so far failed to restore confidence in a fragile market.
The sell-off also comes as investors look ahead to the Fed rate decision on Wednesday, where US central bank is expected to raise interest rates by a further 25%.
Volatility in the oil market is likely to continue across the week.
WTI crude trades +0.6% at $66.50
Brent trades at +0.6% at $72.80
Learn more about trading oil here.