Dow futures -1.8% at 31567
S&P futures -1.6% at 3854
Nasdaq futures -1.2% at 12050
FTSE -3% at 7397
Dax -2.83% at 14780
Credit Suisse sparks a fresh selloff in banks
US stocks are looking to open sharply lower as banking concerns are revived, this time with Credit Suisse under the spotlight after a key backer said it couldn’t pump in any more money.
Trading in Credit Suisse was suspended after share fell over 22% in Europe amid fears of a liquidity crisis. Credit Suisse’s largest shareholder, the Saudi National Bank, said that it would not be able to inject further liquidity into the bank for regulatory reasons. The announcement raised fears in an already very fragile market. Authorities could be forced to act quickly as the failure of this bank could have implications for other European banks which have exposure to the lender. It would appear that we could be on the brink of another financial crisis.
The sharp selloff in the bank comes after the SVB collapse, and as Moody’s cut its outlook for the entire US banking sector’s credit to negative.
Separately retail sales fell by more than expected to -0.4%, down from 3.2% growth in January. The data suggests that the consumer is coming under pressure as interest rates rise.
The data comes after yesterday’s inflation figures showed that core inflation unexpectedly rose 0.5% MoM, highlighting the need for the Fed to keep hiking rates. The question is whether the financial system can take more hikes.
Meta is giving back strong gains yesterday after it announced a further 10,000 job cuts, the second huge round of layoffs in 6 months.
US regional banks are falling in pre-market trade after rebounding strongly yesterday. KeyCorp and PacWest Bancorp are falling 4% and 13%, respectively.
FedEx is rising ahead earnings to be released today.
Where next for the Dow?
The Dow Jones run into resistance at 34545 and rebounded lower below the multi-month rising trendline, the 50, 100 and 200 sma. The 50 sma is crossing below the 100 sma in a bearish signal. The RSI also supports further downside while it remains out of oversold territory. Sellers will look for a break below 31450 the YTD low, the extend the bearish trend towards 31000, the round number.
FX markets – USD rises, EUR tumbles
The USD is rising on the back of safe haven flows as the bank rout continues, this time with Europe under the spotlight. US economic data is playing second fiddle to the broader banking story.
EUR/USD is tumbling amid fears of a financial crisis spreading across Europe after Credit Suisse’s woes. Meanwhile, French inflation was upwardly revised to 7.3%, the highest level that it has been while within the eurozone. The ECB will meet tomorrow and investors are lowering expectations for further rate hikes.
GBP/USD is falling in risk-off trade amid the turmoil in the financial sector and as investors look ahead to the Chancellor’s Budget. The budget is expected to focus on growth and getting people back to work. However, it looks like it will be overshadowed by the chaos in the financial markets.
EUR/USD -1.3% at 1.0583
GBP/USD -0.8% at 1.2053
Oil extends the sell-off
Oil bears continue to drive the price lower. Oil is falling for a third straight day, down 8.3% this week and has hit a fresh 2023 low.
Banking fears are hitting risk sentiment hard after Credit Suisse’s largest investor said that it couldn't provide the bank with any more financial assistance. Fears of a new financial crisis and contagion across the financial sector overshadowing totally upbeat data from China and a report from the International Energy Agency, which said that it expected China is reopening to boost oil demand. This came a day after OPEC upwardly revised its China demand forecast for this year.
Looking ahead investors are now awaiting official USA oil inventory data which is expected to confirm a 1.2 million barrel rise in crude stockpiles reported by the American Petroleum Institute.
WTI crude trades -1.5% at $70.45
Brent trades at -1.2% at $76.10
Learn more about trading oil here.
15:00 US crude oil stockpiles