Market Analysis

The major U.S. index futures are currently pointing to a lower open on Friday, with stocks likely to move back to the downside after ending Thursday’s volatile session mostly higher.

Renewed concerns about the health of the banking sector may inspire traders to cash in on yesterday’s gains, which reflected optimism about an end to the Federal Reserve’s tightening cycle.

U.S.-listed shares of Deutsche Bank (DB) are moving sharply lower in pre-market trading amid a spike by the German lender’s credit default swaps.

A report from Bloomberg indicating Credit Suisse (CS) and UBS Group (UBS) are among banks under scrutiny in a Justice Department probe into whether financial professionals helped Russian oligarchs evade sanctions may also weigh on the banking sector.

UBS’ state-backed acquisition of troubled rival Credit Suisse for 3 billion Swiss francs, or $3.2 billion, helped ease concerns about recent banking industry turmoil earlier this week.

Stocks moved sharply higher in early trading on Thursday but gave back ground over the course of the trading session. The major averages pulled back well off their best levels but recovered going into the close to end the day in positive territory.

The major averages all closed higher on the day, with the tech-heavy Nasdaq posting a standout gain. While the Nasdaq jumped 117.44 points or 1.0 percent to 11,787.40, the S&P 500 rose 11.75 points or 0.3 percent to 3,948.72 and the Dow edged up 76.14 points or 0.2 percent to 32,105.25.

The early rally on Wall Street came as traders continued to react to yesterday's monetary policy announcement by the Federal Reserve.

While some traders were initially disappointed the Fed decided to continue raising rates despite recent banking industry turmoil, indications the central bank is nearing the end of its tightening cycle generated some buying interest.

The latest projections suggest the Fed plans just one more quarter-point rate increase this year, with CME Group's FedWatch Tool currently indicating a 31.3 percent chance the rate hike will come in May and a 68.9 percent chance rates will remain unchanged.

Even if the Fed raises rates again at its next meeting, traders may take some comfort in knowing officials feel a range of 5.0 to 5.25 percent will be the so-called "terminal rate."

Buying interest waned over the course of the session, however, as concerns about the recent trouble in the banking sector continue to hang over the markets.

In U.S. economic news, a report released by the Labor Department unexpectedly showed a slight decrease by first-time claims for U.S. unemployment benefits in the week ended March 18th.

The Labor Department said initial jobless claims slipped to 191,000, a decrease of 1,000 from the previous week's unrevised level of 192,000. Economists had expected jobless claims to rise to 201,000.

The report said the less volatile four-week moving average also edged down to 196,250, a decrease of 250 from the previous week's unrevised average of 196,500.

The Commerce Department also released a report showing new home sales in the U.S. increased from a significantly downwardly revised level in the month of February.

The report said new home sales climbed by 1.1 percent to an annual rate of 640,000 in February after jumping by 1.8 percent to a downwardly revised rate of 633,000 in January.

Economists had expected new home sales to pull back to an annual rate of 645,000 from the 670,000 originally reported for the previous month.

Semiconductor stocks moved sharply higher on the day, driving the Philadelphia Semiconductor Index up by 2.7 percent to its best closing level in eleven months.

Considerable strength was also visible among gold stocks, as reflected by the 1.9 percent jump by the NYSE Arca Gold Bugs Index. The strength in the sector came amid a sharp increase by the price of the preciousmetal.

Software stocks also showed a strong move to the upside on the day, with the Dow Jones U.S. Software Index climbing by 1.8 percent.

Meanwhile, oil service stocks came under pressure over the course of the session, dragging the Philadelphia Oil Service Index down by 2.5 percent. A notable decrease by the price of crude oil weighed on the sector.

Airline, banking and natural gas stocks also showed notable moves to the downside, contributing to the mid-day pullback by the broader markets.

Commodity, Currency Markets

Crude oil futures are plunging $2.49 to $67.47 a barrel after slumping $0.94 to $69.96 a barrel on Thursday. Meanwhile, after soaring $46.30 to $1,995.90 an ounce in the previous session, gold futures are inching up $4 to $1,999.90 an ounce.

On the currency front, the U.S. dollar is trading at 130.10 yen versus the 130.85 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0748 compared to yesterday’s $1.0831.

Asia

Asian stocks ended broadly lower on Friday as concerns about the banking crisis persisted despite comments from regulators that they would take additional steps as needed to support the financial system.

Chinese shares fell notably as heavily indebted Evergrande Group announced its long-awaited debt restructuring. The benchmark Shanghai Composite Index dropped 0.6 percent to 3,265.65, while Hong Kong's Hang Seng Index settled 0.7 percent lower at 19,915.68, dragged down by lenders and property developers.

Japanese shares ended slightly lower after a survey showed manufacturing activity in the country contracted for a fifth straight month in March.

However, a key measure of inflation eased as expected in February, helping ease pressure on the Bank of Japan to immediately tighten policy.

The Nikkei 225 Index edged down 0.1 percent to 27,385.25, while the broader Topix closed 0.1 percent lower at 1,955.32.

Banks Mizuho Financial and Mitsubishi UFJ Financial fell around 1 percent each. Tech stocks finished higher, with Tokyo Electron and Screen Holdings climbing 2-3 percent.

Seoul stocks edged lower to snap a three-day winning streak. The Kospi eased 0.4 percent to end at 2,414.96 after the Bank of England joined Norway and Switzerland in hiking interest rates.

While financials and automakers led losses, Samsung Electronics and LG Electronics both ended up over 1 percent.

Australian markets fell, with financial, technology and energy stocks pacing the decliners. Mining heavyweights BHP and Rio Tinto eked out modest gains.

The benchmark S&P/ASX 200 Index slipped 0.2 percent to 6,955.20 ahead of retail sales and inflation data due next week and the RBA policy meeting on April 4. The broader All Ordinaries Index ended 0.2 percent lower at 7,137.60.

Block Inc. shares plunged 18.4 percent after Hindenburg Research alleged the company overstated its user numbers and understated its customer acquisition costs.

The manufacturing sector in Australia slipped into contraction territory in March, a preliminary survey from Judo Bank revealed today, with a manufacturing PMI score of 48.7, down from 50.5 in February.

Europe

European stocks have moved sharply lower on Friday, with banks under selling pressure once again on a Bloomberg report that Credit Suisse Group and UBS Group AG are among the banks under scrutiny in a U.S. Justice Department probe for potentially helping Russian oligarchs evade sanctions.

While the U.K.’s FTSE 100 Index has tumbled by 1.8 percent, the French CAC 40 Index and the German DAX Index are both down by 2.3 percent.

Austria's Raiffeisen Bank International has slumped on a Reuters report that the European Central Bank is pressing the bank to unwind its highly profitable business in Russia.

Deutsche Bank has also shown a significant move to the downside, extending declines for a third day after a jump in default insurance costs. Credit Suisse and UBS are also posting steep losses.

Miners Anglo American, Antofagasta and Glencore have also moved notably lower in London on growth worries.

TUI Group has also tumbled after the travel group launched a €1.8 billion ($2 billion) capital increase to repay pandemic state aid and strengthen its balance sheet.

German real estate group Deutsche Wohnen has also fallen after it reported a loss for fiscal 2022 of 445.7 million euros compared to a profit of 919.0 million euros in the prior year.

On the other hand, pub group JD Wetherspoon has soared after posting turnaround results in its first half.

Smiths Group has also risen. The industrial technology company upgraded its annual forecasts after reporting a 27 percent jump in first-half profit.

In economic news, the S&P Global Eurozone PMI Composite rose to 54.1 in March vs. 51.9 estimated and 52.0 previous.

U.K. retailers enjoyed a stronger-than-expected month in February, while a measure of consumer confidence climbed slightly in March, separate reports showed earlier today.

U.S. Economic Reports

Reflecting a continued slump in orders for transportation equipment, the Commerce Department released a report on Friday showing an unexpected decrease in new orders for U.S. manufactured durable goods in the month of February.

The Commerce Department said durable goods orders slid by 1.0 percent in February after plummeting by a revised 5.0 percent in January.

Economists had expected durable goods orders to increase by 0.6 percent compared to the 4.5 percent plunge that had been reported for the previous month.

Excluding the steep drop in orders for transportation equipment, durable goods orders were unchanged in February after rising by 0.4 percent in January. Ex-transportation orders were expected to inch up by 0.2 percent.

At 9:30 am ET, St. Louis Federal Reserve President James Bullard is scheduled to give a presentation and participate in a fireside chat on the U.S. economy and monetary policy before Greater St. Louis Inc.