Market Wrap – Relief Rally

The mood improved towards markets during the US trading sessions all of the three major stock markets gauges jumped, with the S&P 500, Nasdaq 100 and Dow Jones posting gains.

Most of the positivity came from the news that as of Monday, the 17 former branches of Silicon Valley Bank will operate as First Citizens branches. The deal included the purchase of about $72 billion of SVB’s assets at a discount of $16.5 billion.

Even the news that the International Monetary Fund (warned there are risks to financial stability stemming from the turmoil in the banking sector couldn’t dent the gains.

Gold also softened as the mood improved. Gold fell just short of the $1,940 level after closing the previous trading week just above the $1,975 area.

Bitcoin was another casualty as it sank back towards the $27,300 area after trading as high as $28,150 level just one-day prior.

The market also looked past poor US data. The Federal Reserve Bank of Dallas’ general business activity index for manufacturing in Texas fell for a second straight month to -15.7 in March of 2023 from -13.5 in February, signalling perceptions of broader business conditions continued to worsen.

The new orders index was negative for a 10th month in a row as orders continued to contract and the shipments index pushed down. Also, labour market measures suggest a resumption of employment growth and continued lengthening of workweeks.

On the other hand, the production index, a key measure of state manufacturing conditions, moved up to 2.5 from -2.8, a reading suggestive of a modest increase in output, and the capacity utilization index returned to positive territory, moving up six points to 2.3.

Meanwhile, the company outlook index remained negative but rose four points to -13.3. The outlook uncertainty index came in at 22.0, down slightly from February but still elevated.