• Wall Street fell more than 1% on Friday as contagion from Silicon Valley Bank (SB) collapse spreads
  • 2 ASX listed companies have money stuck with SVB
  • US CPI and Aussie unemployment rate to headline this week

 

Wall Street fell over 1% on Friday as investors feared a broader financial fallout from the sudden collapse of the tech startup-focused lender, Silicon Valley Bank (SVB).

The S&P 500 and Dow Jones tumbled 1.5% each, while Nasdaq finished 1.76% lower.

The ASX 200 is also poised to open lower on Monday, with the March futures contract pointing down by 0.5% at 8am AEDT.

SVB, a well known tech lender that owned more than US$200bn in assets, became the second biggest bank failure in history. It was hit by a bank run that saw over US$40bn withdrawn by customers within a matter of days.

Some Aussie companies like Canva, ikeGPS (ASX:IKE) and SiteMinder (ASX:SDR) have emerged among a raft of Australian companies struggling to recoup money deposited with SVB.

(see the ASX release from IKE and SDR in the next section below).

Federal Treasurer Jim Chalmers says his department is closely monitoring any local fallout.

“The initial advice we have received from regulators is that any fallout for Australia’s broader financial system is unlikely to be significant,” Chalmers said.

 

And still too many jobs

US investors were also dealing with a February non-farm jobs print that blew past expectations once again. The US economy added 311,000 jobs in February vs forecasts of 225,000.

The US unemployment rate however edged up to 3.6%, and wage growth rose 4.6%, slower than expected.

“As long as we don’t see a scorching hot inflation report on Tuesday, the Fed should continue with its quarter rate point hiking pace,” said Oanda analyst, Edward Moya.

In stock news, KBW Bank index fell over 4% with bank stocks like First Republic Bank falling by 15%. Other bank stocks on free fall include PacWest Bancorp which was down 38%, and Signature Bank sliding 23%.

Footwear retailer Allbirds also plunged 47% after it posted a double digit fall in sales for the quarter, and DocuSign tumbled 23% after JPMorgan downgraded the stock.

Bitcoin briefly fell below US$20k, before climbing back to US$21,364.

“Investors are skeptical to hold anything crypto related in this market environment,” said Moya.

“Banks vulnerable to financial instability risk and crypto exposure are easy targets, and that has some traders eyeing Signature Bank.”

To commodities, crude prices rallied 1.3%, gold was up almost 2%, and iron ore climbed 1%.

Looking ahead to this week, the major headlines will be the US inflation report on Tuesday, and the Aussie unemployment rate on Thursday.

 

5 ASX small caps to watch today

ikeGPS (ASX:IKE)
IKE released a statement to say that as of 13 March, it has total cash of approximately NZ$19.6m, of which NZ$5.3m is held at SVB. Of that amount held at SVB, US$0.25m is insured, which is the maximum insured balance allowable. The FDIC will also pay uninsured depositors an advance dividend within the next week, with that quantum to be confirmed.

SiteMinder (ASX:SDR)
Siteminder also has cash holdings of up to $10m with SVB and SVBUK as of 10 March, and an undrawn US$20m revolving credit facility. Excluding the cash holdings exposure with SVB and SVBUK as of 12 March 2023, SiteMinder’s pro-forma cash and term deposit balance at the end of December 2022 exceeds $58m.

Victory Metals (ASX:VTM)
All air core (AC) drilling assay results have now been reported and have extended the Total Rare Earth Oxides (TREO) discovery area to 34km2 with mineralisation open in all directions. Notable intersections from North Stanmore include: 32m at 1047ppm TREO from 36m, and 16m at 2155ppm TREO from 21m.

Viridis Mining and Minerals (ASX:VMM)
Viridis has received all approvals required to commence its maiden drill program at the Esker Lake property within the South Kitikmeot Project in Nunavut, Canada. Drilling will commence imminently subject to drill rig availability and weather conditions. Viridis intends to complete a maiden drill program to confirm and expand the historic gold mineralisation discovered during drill programs completed in the 1980’s and 1990’s.

RLF AgTech (ASX:RLF)
RLF AgTech has entered the Philippines market, with the signing of an exclusive distribution agreement with TBFI, a fully owned subsidiary of JDI. The agreement outlines an initial sales and purchase target of $8.78 million over the next five years with an option to extend by TBFI.

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