Banks, Fed worries return

The Dow finished 300 points lower on Tuesday, while the S&P 500 and Nasdaq 100 fell nearly 1.2% and 1.1%, respectively, led by a selloff in US regional lenders as concerns about financial stability grew after the second-largest bank failure in the country’s history.  Adding to the bearish sentiment, job openings in the US reached their lowest point in almost two years, raising concerns about a potential slowdown.  Meantime, European equities also took a hit, with the Euro Stoxx 50 Index down 1.5%.  The oil and gas sector was the hardest hit, declining by more than 4% due to a drop in oil prices. 

Summary for 03.05.2023 

• Most Asian equities fell on Wednesday with losses skewed towards financial shares as a rout in US banks spilled over, while investors also turned cautious before the conclusion of a Federal Reserve meeting later in the day.  Regional trading volumes were somewhat muted on account of market holidays in China and Japan. 
• European shares are on course to advance while their US counterparts fell slightly as investors await the Fed’s rate decision later this evening. 
• Oil prices moved little in early Asian trade this morning, hovering around the lowest levels in five weeks amid fears that impending interest rate hikes and growing recessionary risks could weigh on global energy demand. 

• Retail sales in Australia grew by 0.4% month-over-month in March, faster than a 0.2% growth in the previous month.  On a yearly basis, retail sales increased by 5.4%, the least since September 2021.  Meanwhile, the RBA yesterday delivered a surprise 25 basis point interest rate hike and said further tightening may be required to ensure inflation returns to target in a reasonable timeframe. 
• The number of job openings in the US dropped by 384,000 to 9.6 million in March, the lowest level since April 2021 and below the market’s expectation of 9.775 million, indicating that the labour market may be cooling off.   
• The consumer price inflation in the Euro Area increased slightly to 7% in April, from March’s 13-month low of 6.9%.  The core rate eased to 5.6% but remained close to the all-time high of 5.7% from the previous month.  On a monthly basis, consumer prices rose 0.7%, a third straight month of increase. 
• Carl Icahn, the famed activist investor who made a career out of starting corporate brawls, found himself on the receiving end of criticism on Tuesday after Hindenburg Research disclosed a short call against his investment firm.  Shares of Icahn Enterprises closed down 20% in the biggest one-day drop on record, after Hindenburg claimed in a lengthy report that the company is overpriced, and said it found evidence of inflated valuations for some of its assets. 
• Pfizer yesterday reported better-than-expected profit and revenue for the first quarter, though its top line was down nearly 30% from a year earlier, primarily due to weakness in the company’s Covid product sales. The company said it is sticking with its outlook for the year, which accounts for a steep decline in Covid product sales.  Nevertheless, Pfizer said it expects revenue to grow in 2023. 

• Uber reported stronger revenue than analysts had expected and a smaller-than-expected loss.  The company noted gross bookings for its mobility business surged 40% year over year to $14.98 billion, reflecting an apparent increase in demand as Covid concerns ease.  Uber shares surged nearly 12% yesterday. 
• AMD reported better-than-expected revenue and earnings for the first quarter, but shares dropped 6% in extended trading yesterday after the chipmaker issued guidance for the current period that trailed analysts’ estimates.  The company said it expected about $5.3 billion in sales in the current quarter, versus Wall Street estimates of $5.48 billion. 
• Ford Motor on Tuesday reported first-quarter results that significantly topped Wall Street’s estimates, as the automaker’s fleet and legacy operations outweighed growing losses in electric vehicles.  Despite the significant beat, Ford maintained its previously announced 2023 guidance, and the shares ticked lower in extended trading.