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Wall Street closed lower on Tuesday as investor fears of a banking crisis reignited. Shares in First Republic Bank tanked more than 49% on the release of the regional bank’s latest quarterly results including deposits dropping 40% to US$104.5bn in Q1 but have since stabilised and the bank is instilling cost cutting measures including cutting head count by 20% to bolster its balance sheet. The results spooked investors about broader weakness in the banking sector following the recent collapses of Signature Bank and Silicon Valley Bank. The results are the first time this earnings season we have seen investors react as it has been a very uneventful reporting period so far. UPS shares also fell 9% on Tuesday after releasing disappointing earnings results including management saying volumes were under pressure, while Pepsi Co. rallied 2% on better-than-expected results. The Dow Jones closed 1.02% lower, the S&P500 fell 1.58% and the tech-heavy Nasdaq dropped 1.98%.
In Europe markets closed mixed on Tuesday following the release of some key earnings results in the region. UK hotel and restaurant group Whitbread rose 4.6% after the company said profits were ahead of pre-pandemic levels and announced a 300-million-pound share buyback, while Nestle rose 0.1% after the company hiked prices by 9.8% in the quarter. Across the markets, Germany’s DAX rose 0.05% on Tuesday while the French CAC fell 0.56% and, in the UK, the FTSE100 fell 0.3%.
The local market was closed yesterday for the ANZAC day public holiday but has started the week on a very turbulent note after some of the key iron ore miners revealed that production was lower in the March quarter, which comes at the same time iron ore slumped to its lowest level since December last week due to weaker-than-expected demand from Chinese steel mills and reports of stockpiles at ore ports. South32 was the worst performer, dropping 7.4% on Monday after revealing lower production of iron ore this quarter, while BHP Group (ASX:BHP) and Fortescue Metals Group (ASX:FMG) each fell 2% and 3.4% on Monday respectively. The red-hot lithium stocks of 2022 have continued coming under pressure in recent days after Chile’s government, which geographically boasts the world’s second largest reserves of lithium, announced a new plan for the country to take a majority stake in all lithium projects in the region. This bid for state control in Chile could be a positive for local Australian lithium miners and producers as it may push up prices of the green commodity and divert capital to other producers like in Australia.
What to watch today: