Morning Markets
March S&P 500 futures (ESH23) this morning are down -1.18% at a 2-1/4 month low, and March Nasdaq 100 E-Mini futures (NQH23) are down -0.73% at a 1-1/2 month low.
U.S. stock index futures this morning erased overnight gains and are moderately lower. Turmoil in the U.S. financial sector continues to weigh on bank stocks following the collapse of Silicon Valley Bank last Friday and the closing of Signature Bank of New York on Sunday. Stock index futures initially surged overnight after U.S. agencies announced a backstop for U.S. banks. Nevertheless, concerns about fallout from the banking turmoil have led to sharp losses to bank stocks in pre-market trading, dragging the overall market lower.Â
Biotechnology stocks are climbing in pre-market trading and are limiting losses in Nasdaq stock index futures on M&A activity after Pfizer agreed to purchase Seagen for $43 billion and Sanofi agreed to buy Provention Bio for $2.9 billion.
The turmoil in the U.S. banking sector has fueled a surge in safe-haven demand for government debt and knocked global bond yields sharply lower. The 10-year T-note yield today sank to a 5-week low of 3.419%. Also, the 10-year German bund yield fell to a 5-week low of 2.174% and the 10-year UK gilt yield fell to a 1-month low of 3.271%.  Federal funds futures now show the Fed will stand pat and not raise interest rates at the March 21-22 FOMC meeting
The Treasury, Federal Reserve, and FDIC on Sunday introduced a new backstop for banks that will protect all U.S. bank depositors above the $250,000 limit. The Fed announced a new "Bank Term Funding Program" that offers 1-year loans to banks up to $25 billion under easier terms than it typically provides. The Fed also relaxed terms for lending through its discount window, its main direct lending facility.
Bank stocks are under pressure in pre-market trading after New York's Signature Bank was closed Sunday by state regulators, the second crypto-friendly bank to fail in less than a week.  According to data compiled by Bloomberg, more than 190 firms worldwide that received loans from Silicon Valley Bank could be searching for new lenders.Â
Morgan Stanley sees the collapse of SVB Financial Group and Signature Bank of New York as having a negative effect on economic growth and recommends "selling any bounces in stocks on a government intervention to quell the immediate liquidity crisis at SVB and other institutions until we make new bear market lows, at a minimum."
Bitcoin (^BTCUSD) surged by more than +9% today following moves by U.S. authorities to stem the spread of concerns about the health of the U.S. financial system and provide a backstop for U.S. banks.Â
Overseas stock markets are mixed. The Euro Stoxx 50 today is down -3.03%. China’s Shanghai Composite stock index closed up +1.20%, and Japan’s Nikkei Stock Index closed down -1.11%.Â
The Euro Stoxx 50 index tumbled to a 2-month low and is sharply lower. Weakness in European bank stocks is dragging the overall market lower today after HSBC Holdings Plc agreed to buy the UK arm of Silicon Valley Bank. Concerns are growing that the tightening of world central bank policies will lead to more banks having liquidity problems. Germany’s financial regulator also froze Silicon Valley Bank’s branch in Germany and won’t allow the branch to sell assets or make payments because it is at risk of not being able to fulfill commitments to creditors. The selloff in stocks has sparked safe-haven demand for government debt and knocked European bond yields lower.
China’s Shanghai Composite today recovered from a 3-week low and closed moderately higher. The outlook for continuity in China’s financial policies boosted market sentiment and sparked a rally in Chinese stocks after the announcement that PBOC Bank Governor Yi Gang, Finance Minister Liu Kun, and Commerce Minister Wang Wentao would be retained. President Xi Jinping announced the moves at the National People’s Congress. Chinese telecom companies also rallied after the country’s three biggest firms disclosed plans to increase their dividend payout ratio for 2022 after stronger-than-expected earnings.Â
Japan’s Nikkei Stock Index today fell to a 1-week low and posted moderate losses. Japanese bank stocks tumbled today on the fallout from the failure of Silicon Valley Bank and the closing of Signature Bank of New York. There are concerns that other banks around the world may have the same liquidity problems as Silicon Valley Bank from rising financing costs and investment losses due to asset-debt maturity mismatch. Japanese stocks were also under pressure on economic concerns after today’s economic news showed the Japan Q1 BSI large manufacturing business conditions fell -6.9 to a 2-1/2 year low of -10.5.
Pre-Market U.S. Stock Movers
First Republic Bank (FRC) plunged more than -65% in pre-market trading, adding to the -31% of losses last Thursday and Friday, as it tried to quell concerns about its liquidity after it said it had more than $70 billion in unused liquidity from agreements that included the Federal Reserve and JPMorgan Chase.Â
Bank stocks were under pressure in pre-market trading after state regulators closed New York's Signature Bank Sunday, the second crypto-friendly bank to fail in less than a week. PacWest Bancorp (PACW) is down more than -35%. Also, Charles Schwab (SCHW) and Western Alliance Bancorp (WAL) are down at least -18%. In addition, Bank of America (BAC), Comerica (CMA), Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC) are down -2% or more.
Trinity Capital (TRIN) tumbled more than -9% in pre-market trading after Keefe, Bruyette & Woods downgraded the stock to underperform from market perform.
Petco (WOOF) dropped more than -2% in pre-market trading after Citigroup downgraded the stock to neutral from buy.Â
Seagen Inc (SGEN) surged more than +19% in pre-market trading after Pfizer agreed to purchase the company for $43 billion.
Provention Bio (PRVB)Â soared more than +250% in pre-market trading after Sanofi agreed to buy the company for $2.9 billion.
Illumina (ILMN) jumped more than +8% in pre-market trading after activist investor Carl Icahn announced plans to nominate three people to the company’s board of directors.
U.S.-listed Chinese stocks rallied in pre-market trading after new Chinese premier Li Qiang signaled additional support to the private sector. PDD Holdings (PDD), Alibaba Group Holding (BABA), Baidu (BIDU), and NetEase (NTES) are up more than +1%.Â
Crypto-related stocks are sharply higher in pre-market trading after the price of Bitcoin surged more than +10% after U.S. authorities pledged to fully protect all Silicon Valley Bank depositors following the lender’s collapse. Marathon Digital (MARA), Riot Platforms (RIOT), Hut 8 Mining (HUT), and Coinbase Global (COIN) are up +3% or more.
Today’s U.S. Earnings Reports (3/13/2023)
American Vanguard Corp (AVD), Amylyx Pharmaceuticals Inc (AMLX), Avid Bioservices Inc (CDMO), Benson Hill Inc (BHIL), Bluegreen Vacations Holding Co (BVH), Dakota Gold Corp (DC), DocGo Inc (DCGO), Eagle Pharmaceuticals Inc/DE (EGRX), Finance Of America Cos Inc (FOA), Inspired Entertainment Inc (INSE), Lightning eMotors Inc (ZEV), Mitek Systems Inc (MITK), Oportun Financial Corp (OPRT), Republic First Bancorp Inc (FRBK), Sight Sciences Inc (SGHT), Turtle Beach Corp (HEAR), Whole Earth Brands Inc (FREE).
More Stock Market News from Barchart
- Option Volatility And Earnings Report For Mar 13 - 17
- Stocks Set to Open Lower as Bank Shares Fall
- SVB Collapse, CPI and other Key Themes to Watch this Week
- 5 Lessons Learned From Silicon Valley Bank’s Collapse
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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