Marcus Today Pre-Market Podcast – Friday 12th May
Global stocks slumped after Disney’s results, and regional banks, such as PacWest, reported falling deposits. This decline in bank deposits has renewed concerns about the banking industry following the recent collapse of three regional lenders. US jobless claims increased, and producer prices rose modestly, suggesting a slowing economy, which led to Treasury yields dropping. Tesla shares rose by 2.1% in after-hours trading after Elon Musk announced he had found a new CEO for Twitter. Markets remain anxious as Washington struggles with raising the U.S. debt ceiling. Dow Jones down 222 points (-0.66%). Dow at worst down 404. S&P 500 down 0.17%. NASDAQ up 0.18%. VIX Volatility Index down 0.1%. In European markets Stoxx 50 +0.1%, FTSE -0.1%, CAC +0.3%, and DAX -0.4%. SPI Futures are down 8 points (-0.11%).
The number of Americans filing new claims for unemployment benefits rose to a 1.5-year high last week, pointing to cracks in the labour market as demand slows. Claims rose by 22,000 to 264,000 for the week ended May 6th, the highest reading since October 2021. Despite this, the labour market remains tight, with 1.6 job openings for every unemployed person. On the other hand, the US inflation pressures are subsiding as demand cools. Economists predict that claims in the 270,000-300,000 range would signal a deterioration in the labour market.
PacWest Bancorp plummeted 22.7% following news that its deposits fell 9.5% or US$1.5bn, after reports the bank was exploring options to bolster its finances, including a sale. Shares of PacWest and other regional lenders dropped following the FDICs announcement that ~113 of the country's largest lenders will bear the cost of replenishing the $16bn hit to its deposit insurance fund caused by recent bank failures.
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