ASX Futures
ASX futures had dropped 43 points or 0.6% as of 6:00am Wednesday, suggesting a slump at the open.
US Stocks
US stocks suffered Tuesday as disappointing updates from companies including First Republic Bank and United Parcel Service interrupted a weekslong stretch of market calm. All three indices declined, with investors becoming increasingly concerned about the economy.
The S&P 500 dropped 1.6%, the Dow Jones Industrial Average shed 1.0%, and the Nasdaq Composite closed 2.0% lower.
Tuesday’s losses began when beleaguered lender First Republic reported that last month's banking turmoil had cost the bank around $100 billion in deposits.
The health of regional banks had become less of a concern for investors after the abrupt collapse of Silicon Valley Bank spurred fears of widespread bank runs and a sharp pullback in lending.
In commodity markets, Brent crude oil dropped 2.2% to US$80.89 a barrel while gold gained 0.4% to US$1,996.78.
Australian government bonds were unchanged, with the 2 Year yield remaining at 3.14% and the 10 Year yield still at 3.44%. US Treasury notes edged up, with the 2 Year yield increasing to 3.95% and the 10 Year yield inching higher to 3.39%.
The Australian dollar declined to 66.15 US cents from its previous close of 66.94. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged higher to 96.15.
Asia
Chinese shares ended lower, weighed down by pharmaceutical companies and auto makers. Sentiment was weak amid local concerns about another possible Covid outbreak and the country's uneven economic recovery. WuXi AppTec shares fell by 10% of its daily limit after first-quarter results indicated softer earnings for the remainder of the year. BYD Co. declined by 3.6% and Great Wall Motor Co. fell by 4.8%. Gainers included banking stocks and liquor makers. Industrial & Commercial Bank of China gained 0.6%, Agricultural Bank of China rose 1.8% and Kweichow Moutai added 1.5%. The Shanghai Composite Index ended 0.3% lower at 3264.87. The Shenzhen Composite Index closed 1.7% lower and the ChiNext Price Index declined by 1.8%.
Hong Kong's Hang Seng Index closed 1.7% lower at 19617.88. Investor sentiment was likely weighed down by renewed concerns about another potential wave of Covid-19 outbreaks, Saxo market strategist Charu Chanana said in a note. Declines were seen across sectors. Wuxi Biologics (Cayman) closed 7.1% lower, while Xinyi Solar slumped 6.9% and CSPC Pharmaceutical Group shed 5.6%. Gainers included PetroChina, which climbed 2.1%.
Japanese stocks ended higher, led by gains in financial shares partly on continuing hopes that the Bank of Japan may soon shift away from its ultra-low interest rate policy. Sumitomo Mitsui Trust Holdings gained 1.3% and Mizuho Financial Group added 1.3%. The Nikkei Stock Average rose 0.1% to 28620.07.
India's benchmark Sensex index edged 0.1% higher to close at 60130.71, mainly led by financial institutions. Investors are weighing corporate earnings and economic growth outlooks in a busy week, said Deepak Jasani, head of Retail Research at HDFC Securities, in an email. Among financial institutions, Bajaj Finance rose 2.4%, Bajaj Finserv added 2.0% and IndusInd Bank was up 1.8%. Meanwhile, IPCA Laboratories slid 10.2% after saying it plans to acquire a 33.4% stake in Unichem Laboratories for INR10.34 billion.
Europe
European stocks fell after mostly downbeat trading in Asia as banking concerns re-emerged. The pan-European Stoxx Europe 600 dropped 0.4%, the French CAC 40 backtracked 0.6% and the German DAX shed 0.1%. Banks were among the biggest fallers amid fresh uncertainty surrounding the sector.
“First Republic Bank's latest results have restarted the market's worry engine, triggering a sell-off across Europe," AJ Bell investment director Russ Mould wrote. "Its shares fell 22% in after-hours trading after revealing a sharp decline in deposits, prompting speculation it could be the next bank to be taken over."
In London, the FTSE 100 closed down 0.3% as concerns on the economic outlook weighed on markets. "Concerns over the economic outlook appear to be weighing on European markets today, with broad weakness in basic resources and the energy sector, which is being caused by weakness in iron ore and copper prices, dragging on the mining sector, and Glencore and Rio Tinto specifically. Weaker oil prices are weighing on BP and Shell, although we have seen some bright spots," CMC Markets analyst Michael Hewson explained in a note. Whitbread was the biggest gainer in the British index, ending up 4.3%, while Associated British Foods ended furthest in the red, down 4.2%.
North America
US stocks suffered Tuesday as disappointing updates from companies including First Republic Bank and United Parcel Service interrupted a weekslong stretch of market calm. All three indices declined, with investors becoming increasingly concerned about the economy.
The S&P 500 dropped 1.6%, the Dow Jones Industrial Average shed 1.0%, and the Nasdaq Composite closed 2.0% lower.
Tuesday’s losses began when beleaguered lender First Republic reported that last month's banking turmoil had cost the bank around $100 billion in deposits.
The health of regional banks had become less of a concern for investors after the abrupt collapse of Silicon Valley Bank spurred fears of widespread bank runs and a sharp pullback in lending.
However, "when First Republic reports deposit flight like they did... it scares the market, there's no doubt about it," said Michael Scanlon, a portfolio manager at Manulife Investment Management.
First Republic Bank's stock tumbled 49.4%. Northern Trust's shares also fell. Banks of all sizes were under pressure, as demonstrated by the KBW Nasdaq Bank Index, which dropped 3.5%.
Meanwhile, United Parcel Service slid 10.0% after the package carrier warned that "macro conditions" would likely continue to pressure volume.
Unlike last month, when declines in economically sensitive sectors were often offset by gains in tech shares, investors found no such refuge Tuesday. Tech giants Alphabet and Microsoft prepared to report earnings after the close.
