Daily summary: Wall Street is trying to rebound despite banking turmoil

8:05 PM 24 March 2023
  • The major indexes on Wall Street erased some of the morning's losses despite weak opening sentiment. The S&P500 gained 0.3%, the Nasdaq traded in neutral and the Dow Jones rose 0.24%
  • Fed members Bostic, Bullard and Barkin and stressed that the U.S. economy is strong and the banking sector is resilient to turmoil. Bullard indicated that the disinflationary trend in the U.S. will continue, and the Fed will react if the economy slows down. According to the St.Louis Fed chief, the current situation does not resemble the 2008 crisis and the likelihood of a systemic crisis is low;
  • European indices saw declines as investors recognized the risk of a widening banking crisis. Shares of Deutsche Bank, for which CDS rose to levels not seen since March 2020, were down more than 8%. Commerzbank also lost nearly 5.5%, and the vast majority of European bank stocks saw losses today. The DAX closed the session 1.66% lower, the British FTSE was down 1.26%;
  • PMI indexes from Germany and France came out mixed, with industry in both countries under pressure with better readings from the services sector. The industrial sector reading from Germany indicated 44.4 versus 47 expected and 46.3 previously. The French industrial benchmark came in at 47.7, slightly better than the previous one (below forecasts). In both countries, however, the services PMI surprised on the upside;
  • Bloomberg Intelligence analysts estimate that unrealized losses on U.S. bank bonds could reach $1.7 trillion. Bank of America managed to stem the sell-off and conveyed that it plans to reduce its banking and lending division. Shares of Wells Fargo, Citigroup and JP Morgan have not completely erased their opening losses. First Republic Bank shares are still losing more than 3%;
  • The EURUSD exchange rate has rebounded only slightly after recent declines and is settling around 1.075 although the dollar index has clearly strengthened since yesterday;
  • Macro data from the US came out mixed - there was a decline in durable goods orders but the flash PMI from manufactury and services came in well above expectations, indicating an increase in business activity. Retail sales in Canada was higher than expected;
  • The price of oil maintained a slight decline today, with OIL below $75 per barrel. NATGAS, on the other hand, gained nearly 9%;
  • Cryptocurrencies are in a correction after a great two weeks. Bitcoin's price is now around $27,700. The declines accelerated after news of the temporary suspension of spot trading on the Binance exchange. Bloomberg sources indicated that the Nasdaq company will launch custody services for cryptocurrencies by the end of Q2, this year.

US30 chart, D1 interval. Bulls are trying to beat the 200-session average (SMA200, red line). If the 32,500 level will be broken, the upward impulse may accelerate. Source: xStation5

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