Traders flock to the safety of gold and bonds. Picture Getty
ASX Large Caps: Shares slump 1.6pc; bond yields on free fall as traders unwind Fed hike bets
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- The ASX fell 1.6% on Tuesday on concerns of a global meltdown following SVB’s collapse
- Gold stocks and Bitcoin gained as Treasury yields collapsed
- Goldman Sachs now expects the Fed to keep rates on hold this month
The ASX 200 fell 1.6% on Tuesday as concerns around the collapse of Silicon Valley Bank reverberated through Asian markets.
All 11 sectors on the ASX fell – led by Energy and Tech stocks with a 3% drop each, while the Financial sector fell 1.3%.
Overnight, US regional banks staged a mini crash with shares like First Republic Bank falling by over 60%.
Wall Street was in panic mode despite assurances from US Fed regulators who took swift and aggressive action to stem the bank run on SVB and other regional banks.
President Biden also attempted to calm Americans, saying that no losses will be borne by taxpayers, and the money will come from insurance fund fees.
The rout in equities led to a rally in the bond and gold markets as investors took their money to so called safe havens.
The benchmark Aussie 10-year government yield tumbled by 18bp as bond prices rose, while the policy sensitive 2-year yield was down almost 30bp.
The free fall in yields have led some experts to believe that the central bank’s hiking cycle could be over.
“Two-year yields below cash rates tell you that the hiking cycle will end, it just doesn’t tell you when,” said Amy Xie Patrick, head of fixed income strategies at Pendal Group told Bloomberg.
Goldman Sachs now expects the Fed to keep rates on hold at its March 21-22 meeting, while current Fed futures are showing a 70% probability the Fed will raise them by 25bp.
Gold stocks continued their ascent on flight to safety.
“Gold is still a safe-haven,’” said Oanda analyst, Edward Moya.
“It took an unexpected bank run in the digital age and the largest three-day collapse with the 2-year Treasury yield since Black Monday for Wall Street to remember that in uncertain times, some investors feel secure in holding gold. “
The best performing large cap today was Neuren Pharma (ASX:NEU), which lifted another 10% following yesterday’s 20% gain after receiving a “historic” world’s first approval for a Rett syndrome drug, DAYBUE (trofinetide), yesterday.
Bitcoin has meanwhile rallied by around 10% to US$24,475 as financial stability risks sent bond yields crashing.
“Bitcoin volatility should remain elevated and it will be interesting to see how much momentum will be left with today’s surge,” said Moya.
BIG CAP WINNERS
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| Code | Name | Price | % Change | Volume | Market Cap |
|---|---|---|---|---|---|
| NEU | Neuren Pharmaceut. | 9.92 | 9.13 | 2,394,065 | $1,147,754,995 |
| PRU | Perseus Mining Ltd | 2.12 | 4.19 | 5,501,187 | $2,775,950,119 |
| GOR | Gold Road Res Ltd | 1.53 | 3.56 | 5,280,856 | $1,589,879,586 |
| MEZ | Meridian Energy | 4.94 | 2.92 | 15,418 | $6,064,869,298 |
| CEN | Contact Energy Ltd | 7.17 | 2.87 | 4,443 | $1,744,738,604 |
| MCY | Mercury NZ Limited | 5.94 | 2.77 | 19,635 | $8,011,126,020 |
| NCM | Newcrest Mining | 24.66 | 2.64 | 5,333,309 | $21,466,885,904 |
| CMM | Capricorn Metals | 4.48 | 2.64 | 2,670,197 | $1,638,305,643 |
| SGP | Stockland | 3.80 | 2.57 | 10,661,995 | $8,832,535,149 |
| NSR | National Storage | 2.54 | 2.42 | 5,818,512 | $2,993,739,393 |
| SKC | Skycity Ent Grp Ltd | 2.20 | 2.33 | 480,623 | $1,634,441,199 |
| PPH | Pushpay Holdings Ltd | 1.16 | 2.21 | 464,031 | $1,290,879,394 |
| NST | Northern Star | 11.26 | 1.58 | 7,357,736 | $12,741,395,697 |
| GOLD | Gblx GOLD | 26.57 | 1.49 | 288,987 | $2,858,283,967 |
| AIA | Auckland Internation | 8.03 | 1.26 | 1,138,570 | $11,677,330,516 |
| RGN | Region Group | 2.43 | 1.04 | 4,233,712 | $2,757,345,578 |
| SPK | Spark New Zealand | 4.62 | 0.98 | 1,486,257 | $8,560,515,573 |
| BRG | Breville Group Ltd | 19.31 | 0.94 | 302,593 | $2,731,407,512 |
| REA | REA Group | 125.11 | 0.85 | 222,483 | $16,389,140,769 |
Gold miners like Perseus Mining (ASX:PRU), Capricorn Metals (ASX:CMM) and Gold Road (ASX:GOR) were some of the best performers today, up by around 4%.
Utilities / oil stocks Mercury Energy (ASX:MCY) and Meridian Energy (ASX:MEZ) also gained 2% despite oil prices being pushed lower overnight as fears of a potential global financial crisis bruised sentiment.
BIG CAP LOSERS
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| Code | Name | Price | % Change | Volume | Market Cap |
|---|---|---|---|---|---|
| YAL | Yancoal Aust Ltd | 0.06 | -16.84 | 6,772,546 | $9,058,214,538 |
| GRR | Grange Resources. | 0.82 | -8.43 | 3,759,860 | $1,030,031,441 |
| WBT | Weebit Nano Ltd | 7.55 | -8.15 | 1,732,749 | $1,427,327,828 |
| CPU | Computershare Ltd | 21.99 | -7.33 | 2,924,951 | $14,326,497,143 |
| PPT | Perpetual Limited | 21.44 | -6.80 | 902,970 | $2,579,702,678 |
| SYR | Syrah Resources | 1.65 | -6.53 | 1,675,691 | $1,183,518,864 |
| VUK | Virgin Money Uk PLC | 2.71 | -6.40 | 6,646,065 | $2,090,204,676 |
| PLS | Pilbara Min Ltd | 3.66 | -6.04 | 34,065,787 | $11,662,272,589 |
| CXO | Core Lithium | 0.87 | -5.95 | 14,433,431 | $1,715,890,534 |
| MFG | Magellan Fin Grp Ltd | 7.92 | -5.77 | 2,319,462 | $1,524,683,017 |
| SMR | Stanmore Resources | 3.34 | -5.65 | 1,479,138 | $3,190,926,384 |
| PDN | Paladin Energy Ltd | 0.63 | -5.64 | 17,303,259 | $1,981,764,974 |
| CGF | Challenger Limited | 6.56 | -5.61 | 2,155,797 | $4,753,231,615 |
| WHC | Whitehaven Coal | 6.73 | -5.61 | 9,525,097 | $6,340,367,908 |
Coal stocks Yancoal (ASX:YAL) dropped 16% as it goes ex-dividend, and Whitehaven (ASX:WHC) also sold off 6% on sentiment.
Computershare (ASX:CPU) was down 7% on no news.
Market operator ASX (ASX:ASX) fell 0.15% after non-executive and former chair of ASX Clear and ASX Settlement Rob Woods resigned from the ASX board today.
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