US index futures traded significantly higher this morning after the Fed and US Treasury stepped in to limit contagion risk from SVB collapse. Emergency lending programme was announced that will allow banks to access liquidity needed to service deposits. US Treasury Secretary Janet Yellen approved necessary decisions assuring that bank deposits are protected and announced that all depositors will be able to access. While broad market performance on Monday morning showed that the situation has calmed, problems may not be over yet. SVB collapsed and FDIC took control over it while Signature Bank was shut down by regulators due to systemic risk following SVB collapse. However, another bank is rumored to be close to collapsing - First Republic Bank. Shares of this bank are trading 60% lower in premarket today and it is said to be the next in-line should the domino effect continue. Slump in First Republic Bank shares are dragging down the whole market with DAX and other European blue chips indices trading 2-3% lower on the day. US equity futures erased all of the gains and are now trading flat or slightly lower compared to Friday's closing prices.
Taking a look at Dow Jones futures chart (US30) at D1 interval, we can see that all of the gains made earlier today were erased already and now the index is trading lower. The index tested resistance zone marked with 38.2% retracement and 200-session moving average this morning but has pulled back since and is now testing support zone ranging around 31,750 pts area.
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Source: xStation5
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