Daily Market Commentary 26th April 2023

US equity markets tumbled again overnight, with news from the banking sector, once again sending jitters through markets. First Republic Bank revealed that they had lost more than 40% of deposits and the share price collapsed, before a trading halt. FRB has lost 90% of market cap since the Banking crises began and confirmed, that this crises is far from over. The Richmond Fed Manufacturing Index also continued to contract following similar regional index. New Home Sales moved into positive territory, but the S&P Case-Shiller Home Price Index, continued to stumble. Building Permits in the US contracted 7.7%, as the Housing Market remains under extreme pressure, and interest rates continue to rise. The Fed is expected to raise rates again next week, but may hit the pause button, to ease the pain and monitor the impact of the already implemented rises. Bond Yields tumbled across Europe and the US, while the US Dollar gained ground. The EUR crashed back to 1.0950, while the GBP slipped below 1.2400.

Commodity currencies are under pressure as recessionary fears hit the mining sector. The rising reserve forced the AUD back to 0.6600, while the NZD fell below 0.6150. The Fed may well be looking at a rate pause in the future, but the RBA may be regretting their own pause, from their last meeting? The CPI number is due for release today and if it is above 7%, then the RBA will be forced to raise rates again. Local markets will also look at NZ Trade data.