The risks and aftermath of the collapse of Silicon Valley Bank really echoed through markets, with shares ending mostly lower globally. Despite governments taking action to maintain confidence in the banking system, we saw global markets under pressure overnight. The news has also provoked question of whether the Federal Reserve will deliver a larger rate hike of 50-basis points this month.
On Wall Street, financials lagged, as stocks in several regional US banks declined. The Dow dropped for the fifth straight day, the S&P500 was also lower, while the Nasdaq gained. And Treasury yields tumbled, helping to lend some support to equities.
What to watch today:
- Extending these losses, the Australian market is set to drop 1.86% at the open this morning, and that’s according to the SPI futures.
- In this current market, where are the opportunities? Investors are seeking safety in gold amid the turmoil in the banking sector. The gold price saw a sharp rebound, after hitting its lowest level in over a month, jumping 2.4% higher and it continues to be on the rise. We also know that gold is sensitive to the rates outlook – and the collapse of Silicon Valley Bank has not only divided markets on what the Fed will do with its rate-rising cycle but we’re also awaiting US inflation data out this week. So, keep in mind that higher interest rates lift the opportunity cost of holding non-yielding bullion and vice versa. Bell Potter is bullish on gold at the moment, with buy ratings on Capricorn Metals (ASX:CMM), Regis Resources (ASX:RRL) and Gold Road Resources (ASX:GOR).
- Looking at other commodities, the oil price has fallen 2.6% amid the broad risk-off day across markets. And iron ore is in the green, approaching an eight month high as investors continue to assess the outlook for Chinese commodities this year.
- Watch out for Lake Resources (ASX:LKE) today, as the company is set to release its earnings report.
- News Corporation (ASX:NWS) and Coronado Global Resources (ASX:CRN) are set to go ex-dividend, which may see their share prices fall, as investors take their profits.
- Bell Potter have a speculative buy rating on Cluey (ASX:CLU), following the educational technology company’s H1 result and $10.6 million capital raise. Their 12-month valuation has been lowered to $0.50, and at CLU’s current share price of $0.17, this implies 191.5% share price growth in a year.
- Trading Central have identified a bearish signal in Suncorp (ASX:SUN) indicating that the stock price may fall from the close of $12.36 to the range of $11.90 to $12 over 25 days, according to the standard principles of technical analysis.