Following a strong performance yesterday, the ASX is tipped to slide when trade begins this morning, on the back of a day of weak trading on Wall Street.
ASX futures were down 26 points, or 0.37%, to 7,028 early this morning.
The flat sentiment in the US was in large part due to the first hearing into the collapse of SVB and Signature Bank, during which financial regulators were grilled by a Senate Committee and agreed that more regulation in the sector was warranted – including stronger penalties for executives.
Senate banking hearings kick-off
Regulators told the committee that customers of SVB tried to withdraw $100 billion from the bank on the day it failed. Federal Reserve supervisors had also ranked the bank poorly for strength and stability before its collapse.
This was just the start of an investigation into the second- and third-largest banking collapses in US history.
The markets responded accordingly. Overnight we saw the Dow slip 0.1%, the S&P drop 0.2% and the Nasdaq lose 0.5%.
Tech was the most exposed to the headwinds, including Microsoft (NASDAQ:MSFT) (-0.4%), Tesla (NASDAQ:TSLA) (-1.4%) Apple (NASDAQ:AAPL) (-0.4%) and Alphabet (NASDAQ:GOOGL) (-1.7%). Atlassian (NASDAQ:TEAM) bucked the trend with a small lift (0.2%).
Things are expected to get worse for the US economy, with Bloomberg reporting that economists now believe there is a 65% risk of recession in the US.
Still in the States, the job cuts flagged by the Walt Disney Company (NYSE:DIS) in February started this week, with 7,000 jobs axed across several divisions of the company.
The layoffs are, according to the company’s letter to its employees, an attempt to streamline the business and control costs as Disney’s streaming service continues to haemorrhage money.
February CPI figures today
Back home, the February CPI figures are due to drop at 11.30am today and are expected to show a 0.4% drop on the January figure (7.4%), which, if this proves correct, will reinforce the RBA’s view that inflation peaked in the last three months of 2022.
The easing CPI will dovetail with figures released last week by the Australian Bureau of Statistics (ABS) indicating that household wealth had fallen for the third consecutive quarter, decreasing by 0.4% ($57 billion) in the December quarter of 2022.
“Household wealth is now $14.4 trillion, which is 3% lower than a year ago,” ABS head of finance and wealth statistics Mish Tan said.
“This is largely due to falling residential property prices, as rising interest rates lower demand and household borrowing capacity.”
The value of residential land and dwellings dropped by 2.7% ($260 billion) in the December quarter, contributing 1.8% to the overall decline in household wealth.
Residential land and dwellings are valued at $9.2 trillion which is 3.9%, or $374 billion, lower than December 2021.
In other news
Global oil prices moved up yesterday, increasing gains from the session the day before. There were fears of supply disruption risks from Iraqi Kurdistan, along with hopes that the recent banking sector turmoil is drawing to a close.
Brent crude rose by 53 US cents or 0.7% to US$78.65 a barrel, while US Nymex crude added 39 US cents or 0.5% to trade at US$73.20 a barrel.
Base metal prices were up yesterday, with the copper futures price gaining 0.2%. The firmer sentiment was propelled by an improved outlook on the banking sector crisis and an accompanying improved risk appetite.
Aluminium futures climbed 1.2% and gold futures rose by US$19.70 or 1% to US$1,973.50 an ounce.
Spot gold was trading near US$1,972 an ounce at the close of play in the US.
Iron ore futures remained level at US$126.01 a tonne.