by Peter Milios
The collapse of Silicon Valley Bank has caused concern in the US banking and technology industries, reminding investors of the risks they had ignored. Bank stocks have suffered because of the potential losses in the bond portfolios of banks, which amount to $620 billion according to the Federal Deposit Insurance Corporation.
Investors are less confident about central banks tightening monetary policy after the collapse of Silicon Valley Bank in the US. The Australian government bonds have rallied, and there are indications that there will be a pause in rate hikes next month by the Reserve Bank of Australia. Money markets have also reflected this shift in sentiment, with the overnight-indexed swaps contract suggesting better-than-even odds of a pause.
While Australia is not directly affected by the SVB crisis, the wobbles in parts of the US banking sector are contributing to a global trend towards easing monetary policy. The RBA has acted as a bellwether for other central banks, and its February statement led to a bond rout. The governor has now shifted back to a softer tone, in line with the current global sentiment.
At noon, the S&P/ASX 200 is 0.61 per cent lower at 7,101.40.
The SPI futures are pointing to a fall of 43 points.
Best and worst performers
The best-performing sector is Materials, up 0.6 per cent. The worst-performing sector is REITs, down 1.95 per cent.
The best-performing large cap is Northern Star Resources (ASX:NST), trading 4.93 per cent higher at $11.07. It is followed by shares in Newcrest Mining (ASX:NCM) and Meridian Energy (ASX:MEZ).
The worst-performing large cap is Lynas Rare Earths (ASX:LYC), trading 3.8 per cent lower at $6.83. It is followed by shares in TPG Telecom (ASX:TPG) and QBE Insurance Group (ASX:QBE).
Asian markets
Asia-Pacific markets traded lower on Monday, as U.S. regulators announced plans to backstop both depositors and financial institutions associated with Silicon Valley Bank, seen as a move to stem further systemic risk.
Silicon Valley Bank last week was shuttered by regulators, after customers withdrew a staggering $42 billion of deposits by the end of Thursday.
Japanese markets opened lower. The Nikkei 225 started the day 1.18 per cent lower, while the Topix saw a deeper loss at 1.52 per cent down.
South Korea’s Kospi dropped marginally, while the Kosdaq was 1.08 per cent lower.
Company news
Neuren Pharmaceuticals (ASX:NEU) has announced that they have received an FDA approval for their DAYBUE product, which is the first approved treatment for Rett syndrome. In response, Neuren CEO — commented: “this is a transforming milestone that places us in a position to make the most of the opportunities ahead of us, as we work with the communities to make a difference in four other neurodevelopmental disorders.” Shares are trading 17.9 per cent higher at $9.04.
Metro Mining Limited (ASX:MMI) announced that it has entered into a facility agreement with Nebari Partners for a financing facility of up to US$30 million. In response, Simon Wensley, CEO & Managing Director of Metro, stated: “It is a testament to the strong fundamentals of the Bauxite Hills Mine expansion, positions Metro to deliver greater volumes of bauxite to its customers at a time of rising bauxite prices.” Shares are trading 5 per cent higher at 1.1 cents.
Meteoric Resources (ASX:MEI) announced that the Definitive Agreement with Togni Group for the acquisition of the Rare Earths rights comprising the Caldeira Project has been signed. Dr Andrew Tunks Meteoric’s Director said, “In this process, Togni and Meteoric have developed extremely strong ties which now enables Meteoric to leverage Togni’s remarkable 112-year history of mining in the area to fast track our efforts.” Shares are trading 2.17 per cent higher at 11.8 cents.
Commodities and the dollar
Gold is trading at US$1782.70 an ounce.
Iron ore is 0.7 per cent higher at US$129.95 a tonne.
Iron ore futures are pointing to a 0.2 per cent rise.
One Australian dollar is buying 66.17 US cents.
