Market Highlights: Markets highly nervous about a new banking crisis; and 5 ASX small caps to watch on Thursday
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The ASX is set to open much lower on Thursday as Credit Suisse sparked fears of a global banking crisis.
At 8am, the ASX 200 March futures contract was pointing down by 1.75%.
Overnight on Wall Street, the S&P finished 0.7% lower, the Dow fell 0.87% and the Nasdaq was flat.
Fear has once again gripped the markets which are now increasingly concerned about a repeat of past financial crises.
After the collapses of Silicon Valley Bank, Signature Bank and Silvergate in the last few weeks, it’s now Switzerland’s Credit Suisse (CS) that has investors worried.
Unease about CS’ mounting problems has come to a peak, and now the bank is reportedly scrambling to raise fresh capital amid reports that the lender was seeking a Swiss government backstop.
The central bank Swiss National Bank (SNB) has announced that will provide liquidity to CS if necessary, as the CS share price crashed 24% to new lows.
“Big Short” investor Danny Moses, who is known for successfully betting against the housing market before its 2008 implosion, speculates that bank failures are just starting.
“You can’t assume that the regulators have any idea what they’re actually dealing with now, considering that they were completely caught off guard… by what just happened at Silicon Valley Bank,” Moses told CNBC. “That should make people nervous.”
The 3 main factors behind the current market turmoil
Mismanagement at individual banks and supervisory lapses
A badly mishandled monetary policy transition complicating insufficient private/public sector adjustments
Policy-induced volatility amplifying economic/financial fluidity
— Mohamed A. El-Erian (@elerianm) March 15, 2023
Another expert says the market turmoil happened due to more than a decade of rock-bottom interest rates, and a massive quantitative easing experiment.
“Because of that, we’re now left in a situation in which stock markets have tumbled, banks around the world have been pummelled, and everyone is wondering just how bad the situation is going to get,” said Oanda senior analyst, Craig Erlam.
Rating agency Moody’s has downgraded the entire US financial sector’s outlook to ‘negative’, citing a ‘rapidly deteriorating operating environment’.
Meanwhile, bond yields have plummeted further, with traders taking their bets off on further Fed rate hikes, particularly as US retail sales fell moderately in February, as shown in last night’s release.
Bitcoin was down 1% in the last 24 hours to US$24,403.
Crude prices were smashed again, down by around 5%. Oil has come under significant pressure in recent days as inventories build on slowing demand.
Stockpiles in the US show a steady increase in inventories amid what Capital Economics’ chief commodities economist Caroline Bain called “subdued domestic demand”.
Gold is rallying by 1% on flight to safety and despite a backdrop of a much stronger dollar. Iron ore meanwhile has softened by 1% to $US130.20 a tonne.
All eyes will now be on the ECB interest rates decision later tonight.
Tambourah Metals (ASX:TMB)
Tambourah announced that it has entered a collaboration partnership with Australia’s national science agency, CSIRO, to apply machine learning using their hyperspectral dataset to define first pass exploration targets across the Russian Jack Lithium project. Tambourah has previously used hyperspectral data to identify significant swarms of possible L-C-T pegmatites at Russian Jack. The pegmatite swarms cover an area of approximately 320km2, with some areas of terrain that is difficult to access.
Dynamic Metals (ASX:DYM)
Five RC holes were drilled to test the Kambalda nickel ore deposit model at Dordie Far West, part of the Widgiemooltha Project. Three holes returned significant nickel results from first pass 3m composite RC samples, including: WDR002 – 15m @ 1.86% Ni from 27m downhole, WDR003 – 15m @ 1.11% Ni from 30m downhole, and WDR005 – 13m @ 1.38% Ni from 30m downhole.
Singular Health (ASX:SHG)
Singular Health has appointed a Chinese sales partner and received its first enterprise licence order. The initial order was received from Yancheng N1 Peoples Hospital in China for 100 licences of a translated version of 3Dicom MD to be used for patient education, medical training, and research. The enterprise licence order adds up to US$40,000 of annualised recurring revenue.
SRG Global (ASX:SRG)
SRG announced that it has been awarded multiple site infrastructure contracts in the resources sector in Western Australia. The total value of the new works secured is ~$50m, which includes the supply of asset care non-destructive testing, condition monitoring and inspection services for BHP iron ore across all WA iron ore mine site, rail, road and port infrastructure.
More broad +400m and +200m rare earth and phosphate intercepts were confirmed ahead of a pivotal Cummins Range Resource upgrade. Assay results have been received for a further 22 drill holes, with 90% reporting significant rare earth and phosphate mineralisation. Key assay results include: 426.9m at 0.4% TREO and 4% P2O5 in hole CDX0038; and 406m at 0.3% TREO and 4% P2O5 in CDX0024.
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