An unholy trinity of U.S. developments on Tuesday - poor corporate earnings, a bank's value going up in smoke and slumping consumer confidence - will likely set an extremely gloomy tone for Asian markets on Wednesday. This will be the backdrop to trade figures from Thailand and New Zealand, industrial production data from Singapore and inflation figures from Australia. The three main indexes on Wall Street closed down between 1% and 2% - the Nasdaq's 2% fall was its steepest in six weeks - as fears over recession and the banking sector intensified.
The travails at First Republic Bank should be a wake-up
call to anyone who thought the U.S. banking turmoil had somehow
been cleared up in a matter of weeks.
After reporting on Monday a plunge of more than $100 billion in
deposits in the first quarter, shares on Tuesday plunged 50% at
the bank - the 15th largest in the country at the start of the
year. The bank has lost 93% of its value this year.
The wider U.S. regional banking index's 4% slide - its
fourth straight decline - took its year-to-date decline to 25%.
Notably, the plunge in U.S. bond yields and Fed expectations on
the back of this did not weaken the dollar - safe-haven buying
pushed it up 0.5% for one of its best days since the banking
shock in mid-March.
Safe-haven flows dominated trading on Tuesday, with the Japanese
yen, Swiss franc, government bonds and gold all posting strong
gains.
If there is a tailwind for Asian markets on Wednesday amid the
headwinds it will be the after-hours results from Google's
parent company Alphabet and Microsoft .
Profits at both tech giants topped Wall Street estimates, and
shares in both rose 4% in after hours trading.
On the economic data front on Wednesday, Australian weighted
annual CPI inflation is expected to have finally slowed in the
first quarter to 6.9% from a 33-year high of 7.8%.
Here are three key developments that could provide more direction to markets on Wednesday: - Australia CPI inflation (Q1) - Singapore manufacturing (March) - Thailand trade (March) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ First Republic Bank shares collapse Australian weighted CPI inflation US regional banking share index ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (By Jamie McGeever; Editing by Josie Kao)
jamie.mcgeever.thomsonreuters.com@reuters.net))