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U.S. equity index futures green: Dow up ~1%
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Euro STOXX 600 index up ~1.6%
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Dollar, gold decline; crude up >1%; bitcoin edges up
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U.S. 10-Year Treasury yield rises to ~3.59%
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NYCB'S DEAL FOR SIGNATURE BANKS ASSETS: NOTHING TO LOSE (0915 EDT/1315 GMT) New York Community Bancorp's move to buy deposits and loans from doomed Signature Bank is largely being perceived as a win, with analysts noting that it could boost NYCB's earnings.
"We believe the stock's very favorable response to the transaction captures the estimated financial benefits of the transaction," analysts at JP Morgan said. Shares of New York Community Bancorp have climbed nearly 32% since the deal was announced on Monday, bucking the gloomy trend that was triggered by the collapse of some U.S. midsized lenders last week. NYCB is up 7.3% to $9.24 in premarket trade. Shares of PacWest Bancorp are up 12.5% premarket, while First Republic Bank is jumping 26.7% after fears over the regional lender's health pushed its stock to an all-time low in the previous session. Post the deal, JP Morgan has hiked its fiscal 2023 and 2024 EPS view for NYCB by 19.5% and 29.8%, respectively.
NYCB, which had a significant amount of higher-cost wholesale borrowings in the fourth quarter of last year, "will use the acquired cash to greatly reduce higher-cost wholesale borrowings," said Credit Suisse analysts.
"We believe the ongoing integration of Flagstar Bancorp and the now assumed Signature operations remains critical. Minimizing client and employee attrition, particularly from Signature, will be critical to achieving the longer term financial benefits of the transaction," said RBC analysts. Ratings agency Fitch also said that the bank's ratings would be unaffected by the purchase of the portion of Signature Bank.
Amid the stress brought on by the recent banking crisis and rising interest rates, the acquisition adds to some relief that UBS Group AG's takeover of the troubled Credit Suisse Group AG would avert a wider banking crisis.
(Tejaswi Marthi)
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NASDAQ COMPOSITE: PINCHED IN (0900 EDT/300 GMT) The Nasdaq Composite has been leading the way higher in 2023. The tech-heavy index is up nearly 12% so far this year vs about a 3% rise for the S&P 500 index . Of note, however, for most of this year, the IXIC has been trapped between two converging Fibonacci-based moving averages on the weekly charts:
Indeed, since reclaiming its rising 233-week moving average (WMA) on a weekly closing basis on January 13, the Composite has been using it as support.
Last week, amid intense market stress, the IXIC hit a low of 10,982, which put it just around 15 points above its 233-WMA. The Composite then vaulted higher. With Monday's 11,675 finish, the index is up more than 6% off last week's low. However, on the upside the IXIC is just shy of its descending 55-WMA, which is now resistance around 11,730. Since ending the week below the 55-WMA on January 21, 2022, the IXIC has managed only one weekly close back above it. On February 3 of this year, it ended above it by less than 10 points. Thus, with these two moving averages pinching together, traders will be watching for what appears to be any more decisive weekly closing penetration of the 55-WMA, or weekly closing violation of the 233-WMA. Above the 55-WMA, additional hurdles are in the 12,250-12,270 area, while below the 233-WMA, support resides in the 10,291-10088 area.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
