Morning wrap (10.03.2023)

• Wall Street indices plunged significantly yesterday, following a late-session slump. S&P 500 dropped 1.85%, Dow Jones moved 1.66% lower and Nasdaq plunged 2.05%. Russell 2000 slumped 2.81%

• Concerns over the condition of the US banking sector are cited as a prime reason behind the drop. Share price of SVB Bank more than halved after Bank informed that it had to sell a $21 billion bond portfolio to shore up liquidity and a quick sale resulted in $1.8 billion pre-tax loss. SVB launched a $1.75 billion equity offering to plug a hole caused by the loss

• SVB, short for Silicon Valley Bank, is a lender servicing tech companies primarily

• Shares of other US banks also took a hit as investors grew concerned that the issue may be sector-specific rather than bank-specific. KBW, Nasdaq banking index, slumped 7.7% yesterday, marking the biggest one-day drop since mid-2020

• Indices from Asia-Pacific followed lower into footsteps of their US peers. Nikkei dropped 1.7%, S&P/ASX 200 plunged 2.3%, Kospi and Nifty 50 declined around 1% each and indices from China traded 0.9-2.7% lower

• DAX futures point to a lower opening of the European cash session

• Bank of Japan left short-term interest rates as well as 10-year yield target unchanged at a meeting today. BoJ also voted to keep the band around target yield unchanged at +-50 basis points. JPY took a hit as there were slight hopes that Kuroda may surprise at his last meeting as BoJ Governor and push for another widening of the band

• Kazuo Ueda won final approval from Japanese parliament to succeed Kuroda as Bank of Japan Governor

• Matsuno, Japan Chief Cabinet Secretary, said that Japanese government will discuss government-BoJ joint statement with new BoJ governor but it is too early to comment on the details

• Chinese state media announced that Xi Jinping was unanimously elected for third term as president by Chinese parliament

• Japanese household spending dropped 0.3% YoY for January (exp. -0.2% YoY). Household spending increased 2.7% MoM, what was the first monthly increase in 3 months

• Gold jumped amid safe-haven flows yesterday in the evening. Situation has stabilized since and gold has been moving sideways as European cash session drew closer

• Oil slumped yesterday amid risk asset sell-off and the move is being deepened today - Brent drops 0.5% while WTI trades 0.7% lower

• EUR and CHF are the best performing major currencies while JPY and CAD lag the most

USDJPY bounced off the 136.00 swing area following today's BoJ decision. The pair is now attempting to make a break above the 50-hour moving average (green line) in the 136.80 area. Source: xStation5