- ASX accelerated losses in the afternoon, closing over 1% lower
- Healthcare stock Healius gets takeover bid from a much smaller company
- Market places 25% chance the Fed will pause this week
The ASX 200 index finished almost 1.5% lower on Monday as traders digested news of the UBS takeover of Credit Suisse over the weekend, along with comments from RBA assistant governor Chris Kent today.
While the 3-billion Swiss francs takeover of CS ensured we won’t have a systemic collapse, we now have a huge crisis of confidence in the banking system.
Despite all that, CS told its employees that bonuses and pay increases will still be paid, telling them that it’s “business as usual”.
The merger has been blessed by the Swiss National Bank, which reportedly generated an annual loss of US$141.54 billion.
Back home, RBA assistant governor Chris Kent assured the market that nothing like that will happen in Australia, and Australian banks are “unquestionably strong” with solid capital buffers.
“Volatility in Australian financial markets has picked up, but markets are still functioning and, most importantly, Australian banks are unquestionably strong,” Kent said in a speech in Sydney today.
“The banking sector is in much stronger shape globally than it was 10 years ago. Regulators, markets, and banks have put a lot more capital in place and are more stringent on liquidity.”
“Even if markets remain strained for a time, Australian banks’ issuance will continue to benefit from the strength of their balance sheets.”
ASX gold stocks rally, others sell off
ASX stocks were sold off across the board today – with Energy, Staples and the Mining sectors falling the most.
Gold stocks, however, rallied as the spot gold price lifted 3.5% to US$1,988.10 on Friday on the back of bank angst.
The best performing large cap was Healius (ASX:HLS), which rose 10% after receiving an all-scrip takeover offer from Australian Clinical Labs (ASX: ACL), a company more than half its size.
Latitude Group (ASX:LFS), which is still on a voluntary trading halt, told shareholders the cyberattack on its systems announced last week is now the subject of an investigation by the Australian Federal Police.
Approximately 330,000 LFS customers have had their personal information, most of which are drivers’ licence data, stolen.
Huge rates decision ahead
Elsewhere, US stock futures prices in Asia point to a half-percentage higher opening on Wall Street later tonight.
Bitcoin has been slipping by 1.5% in the past hour to US$27,470. The AUD has been rangebound, and is trading now at 67.08 US cents.
In China, tech giant Tencent will hand down earnings later this week, its first set of results following China’s decision to abandon its zero-Covid policy.
“Tencent’s earnings this week could be a key proxy for broader Chinese tech, and what lies ahead in 2023,” said Josh Gilbert, market analyst at eToro.
In geopolitics, a North Korean newspaper claimed 800,000 citizens volunteered on Friday to join the military in order to ‘wipe out war maniacs’.
Russia’s president Vladimir Putin followed the news of an International Criminal Court arrest warrant for him with a visit to Crimea and the occupied city of Mariupol in Ukraine.
Meanwhile, the Fed Reserve has a huge rate decision on its hands on Wednesday.
Right now, the futures market implies a 25% chance the Fed will pause and leave its interest rates unchanged.
“The current banking situation will tighten financial conditions, and the Fed will not want to aggravate the situation by overtightening,” said Gilbert.
BIG CAP WINNERS
Swipe or scroll to reveal the full table. Click headings to sort.
| Code | Name | Price | % Change | Volume | Market Cap |
|---|---|---|---|---|---|
| EVN | Evolution Mining Ltd | 2.86 | 10.66 | 14,384,615 | $4,734,342,103 |
| GOR | Gold Road Res Ltd | 1.67 | 10.63 | 5,063,758 | $1,622,216,120 |
| HLS | Healius | 3.03 | 8.99 | 3,709,971 | $1,583,289,811 |
| PRU | Perseus Mining Ltd | 2.30 | 8.49 | 3,371,673 | $2,899,021,800 |
| NST | Northern Star | 11.76 | 7.94 | 4,020,026 | $12,522,906,059 |
| RRL | Regis Resources | 1.89 | 7.83 | 3,307,903 | $1,325,070,498 |
| SLR | Silver Lake Resource | 1.17 | 7.60 | 5,238,467 | $1,008,772,601 |
| BGL | Bellevue Gold Ltd | 1.19 | 7.47 | 4,588,386 | $1,247,682,873 |
| CMM | Capricorn Metals | 4.72 | 5.96 | 1,116,877 | $1,672,123,879 |
| DEG | De Grey Mining | 1.53 | 5.88 | 4,192,414 | $2,255,886,192 |
| NCM | Newcrest Mining | 25.57 | 5.62 | 4,878,980 | $21,636,690,581 |
| AGL | AGL Energy Limited. | 7.11 | 3.42 | 1,814,631 | $4,621,773,491 |
Gold miners St Barbara (ASX:SBM), Gold Road Resources (ASX:GOR), and Evolution Mining (ASX:EVN) jumped by as much as 10%.
Wealth manager AMP (ASX:AMP) rose 2% after announcing the first-stage completion of the sale of AMP Capital to Dexus Funds Management would occur on Friday 24 March 2023, after both parties entered into an unconditional agreement on a revised transaction structure for the sale of the business.
BIG CAP LOSERS
Swipe or scroll to reveal the full table. Click headings to sort.
| Code | Name | Price | % Change | Volume | Market Cap |
|---|---|---|---|---|---|
| LTR | Liontown Resources | 1.53 | -7.27 | 11,281,660 | $3,627,450,144 |
| NEU | Neuren Pharmaceut. | 12.38 | -6.42 | 881,883 | $1,670,494,893 |
| PNI | Pinnacle Investment | 7.49 | -6.14 | 186,698 | $1,606,119,366 |
| WBT | Weebit Nano Ltd | 7.13 | -5.69 | 602,035 | $1,312,724,864 |
| MFG | Magellan Fin Grp Ltd | 7.65 | -4.97 | 868,728 | $1,461,154,558 |
| PTM | Platinum Asset | 1.68 | -4.82 | 412,904 | $1,035,488,259 |
| A2M | The A2 Milk Company | 6.065 | -4.79 | 1,894,331 | $4,614,165,792 |
| KAR | Karoon Energy Ltd | 1.975 | -4.59 | 1,010,259 | $1,164,993,100 |
| SMR | Stanmore Resources | 3.05 | -4.39 | 2,242,451 | $2,875,439,312 |
Lithim miner Liontown Resources (ASX:LTR) fell 8% on no news.
Qantas (ASX:QAN) fell 3% as competition watchdog, the ACCC, said it will delay the review of the proposed Qantas-Alliance deal until April 20th.