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U.S. equity index futures slightly red: S&P 500 off ~0.3%
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SPDR S&P regional banking ETF down >4% premarket
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Euro STOXX 600 index down ~0.7%; ECB hikes 25bps
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Dollar edges up; gold, crude dip; bitcoin up >1%
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U.S. 10-Year Treasury yield flat at ~3.40%
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RETAIL PUNTERS JUST CAN'T RESIST BANK DIP (0921 EDT/1321 GMT) First Republic Bank's collapse this week has triggered a sharp drop in shares of regional U.S. lenders despite regulatory efforts to call an end to the banking crisis that began with the failures of Silicon Valley Bank and Signature Bank in March.
Retail investors are on a buying spree, with regional banks down 8.9% so far this week. Despite sitting on about 31% losses on their financials purchases since the beginning of March, retail investors bought the dip again on Wednesday, according to Vanda Research.
Chart by Vanda Research
"On balance, with retail investors buying the dip quite aggressively yesterday it is quite plausible that they constituted exit liquidity for hedge funds," they added. Big banks like Bank of America , regional banks who are perceived as safer such as Truist Financial Corporation and diversified ETFs like the SPDR S&P Regional Banking ETF drew larger retail inflows on Wednesday, according to Vanda.
Individual investors, nonetheless, sold Western Alliance Bancorp for their fourth straight session despite the U.S. regional bank's efforts to reassure investors that it had not seen unusual deposit outflows following the sale of collapsed lender First Republic Bank to JPMorgan Chase & Co on Monday.
(Bansari Mayur Kamdar)
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BRITAIN'S BANKS EMERGE UNSCATHED AS U.S. BANKING TURMOIL RAGES (0904 EDT/1304 GMT) As the banking sector turmoil in the United States rages on, investors in the UK breathed a sigh of relief as Lloyds on Wednesday wrapped up a better-than-expected earnings season for top British lenders. While across the Atlantic, a number of U.S. regional bank collapses sparked a deposit flight to larger institutions or to money market funds for higher returns, British lenders seem to be in a much better position, according to analysts. UK banks did indeed face a small withdrawal of funds amid the U.S. banking crisis, with deposits falling by £18.1 billion in March, but it was not big enough to constitute a bank run, according to Capital Economics. "The UK’s Big Five are showing no real signs of deposit flight, any unexpected deterioration in their loan books or undue risk-taking," said AJ Bell investment director Russ Mould in a note. Instead, investors seem to be mildly perturbed by the lenders' cautious guidance, said Mould. The absence of earnings target upgrades from big UK banks this quarter can be explained by competition among banks, as well as an uncertain path forward for interest rates as well as the economy, according to Mould. Other big banks in the broader European region have also seen a dip in deposits, with Spain's Santander the only European heavyweight to report a rise. UK bank shares have also fared much better than those of U.S. banks this year, with the FTSE 350 banking index rising 6.3% so far in 2023 against a 14.8% fall in the S&P 500 banking index The Bank of England is expected to hike interest rates by 25 basis points next week given persistent inflationary pressures.
(Amruta Khandekar)
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CRUDE OIL FUTURES: HAMMERING OUT A FLOOR? (0900 EDT/1300
GMT)
Rocked by recession fears, NYMEX crude oil futures have been on the back foot. That said, the futures are
attempting to make a stand on Thursday as they test key chart
support.
Despite U.S. crude oil inventories falling for a third week
in a row and the U.S. Strategic Petroleum Reserve hitting its
lowest levels since October 1983, a surprise rise in gasoline
stocks on weakened demand, coupled with the Fed's 10th-straight
interest rate hike on Wednesday, may have dented sentiment
enough to cause a swoon in Thursday's trading.
The futures slid to $63.64, or their lowest level since
early December 2021:
With this, futures once again tested support at the 200-week
moving average (WMA), which has proven to be a long-term magnet.
It now resides around $66.85.
Additionally, the futures flirted with the 38.2% Fibonacci
retracement of the April 2020-March 2022 advance, at $65.25, the
March 2023 low at $64.12, and a weekly Gann Line that now
provide supports around $63.50.
The Dec. 2, 2021 low was at $62.43, and the Aug. 23, 2021
trough was at $61.74. Thus, there is a wealth of support in the
mid-to-low $60s that may serve to continue to stem weakness.
The futures have subsequently snapped back to the $69 area,
and are forming a daily hammer candle. If this pattern holds
through the close, it may signal a bottom and trend reversal.
As stands, in order to add confidence in a turn, traders
will want to see Friday's close above $72.31 to form a hammer on
a weekly basis.
In any event, if the daily pattern evaporates and support
gives way, the 50% retracement of the April 2020-March 2022
advance is at $45.09, so additional downside could be severe.
Meanwhile, the S&P 500 energy sector , which ended at
607.37 on Wednesday, is once again teetering as it breaks its
12-month moving average, which now resides around 632.70.
(Terence Gabriel)
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CrudeFuts05042023 UK bank shares outperform U.S. peers Net retail flows vs. financials performance from Vanda Research ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
