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Equities Roundup: Big Banks Deposit $30B into Beleaguered FRC

US STOCKS
  • Support for US equities continued to gain momentum late Thursday, front month S&P futures marking new session high of 3994.5 - best level since last Thursday before news of Silicone Valley Bank's collapse hit (in-turn spurring reversal in rate hike expectations ahead next week's FOMC with rate cuts priced in by mid-year).
  • Leading gainers are Communication Services, IT, Consumer Discretionary and Financial sectors.
  • The main trigger for the strong rally was news that JP Morgan, Citi, BofA, Well Fargo and seven other banks will make a total of $30B in deposits to support First Republic Bank (FRC). FRC was assailed this week after Silicone Valley Bank collapse last Friday, FRC trading +15% at 35.84 at the moment vs. 52W low of 17.53.
  • Incidentally, the improved risk appetite for stocks weighed on US rates markets, particularlly in the short end as midweek implied rate cut pricing receded.
  • From a technical standpoint, short-term gains are still considered corrective. Price last week cleared a key short-term support at 3960.75, Mar 2 low to confirm a resumption of the bear cycle that has been in place since Feb 2. The move lower signals scope for an extension towards 3822.00 next, the Dec 22 low. Initial firm resistance is seen at 4031.46, the 50-day EMA.
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