Market Wrap – Await earnings

The US dollar recovered, and the stock fell as risk off market sentiment came into play due to worse than expected earnings data from the US banking sector.

Shares in First Republic Bank crashed to a new record low after the troubled US regional lender admitted last month’s banking crisis sparked a customer deposit flight of more than $100 billion. The stock dropped by nearly 30% on today.

It followed the release of its first quarter earnings report that revealed the extent of the challenge it faced to recover the business. First Republic said the deposit outflow.

The deposit outflow amounted to more than half its pre-crisis total, had cooled since the rescue cash was announced but it was yet to recover any meaningful deposits.

Naturally, the Nasdaq lost more ground and traded close to 1% lower, while the EURUSD pair lost the 1.1000 level and European stocks also suffered losses.

US April consumer confidence also came in weaker than expected. 101.3 vs 104.0 expected. The Present situation index 151.1 vs 151.1 prior, although inflation expectations fell.

The US did post better housing data this afternoon after sales of new single-family houses in the US unexpectedly jumped 9.3% month-over-month to a seasonally adjusted annualised rate of 683,000 in March of 2023, the highest in a year, and beating forecasts of 630,000.

Sales jumped 170.8% to 65,000 in the Northeast, 29.8% to 161,000 in the West and 6% to 71,000 in the Midwest but fell 5.4% to 386,000 in the South.

The median price of new houses sold was $449,800 while the average sales price was $562,400, compared to $435,900 and $511,800 respectively a year ago.

There were 432,000 houses left to sell, the lowest since April of 2022, corresponding to 7.6 months of supply at the current sales rate.