Market Wraps

Morning Wrap: S&P 500 lower, UBS agrees to buy Credit Suisse, gold soars, ASX 200 set to tumble

Mon 20 Mar 23, 8:28am (AEST)

ASX 200 futures are trading 98 points lower, down -1.42% as of 8:20 am AEDT.

Major US benchmarks fall as banks extend declines, UBS to take over Credit Suisse for US$3.2 billion in stock, bond yields tumble to levels not seen since September 2022, tightening US financial conditions and lending standards correspond to approximately 1.5% in rate hikes, oil markets set to re-enter deficit in the second half of 2023 and the option market hints that something big is brewing.

Let's dive in.

Overnight Summary

Mon 20 Mar 23, 8:28am (AEDT)

Name Value Chg %
Major Indices
S&P 500 3,917 -1.10%
Dow Jones 31,862 -1.19%
NASDAQ Comp 11,631 -0.74%
Russell 2000 1,726 -2.56%
Country Indices
Canada 19,388 -0.77%
China 3,251 +0.73%
Germany 14,768 -1.33%
Hong Kong 19,519 +1.64%
India 57,990 +0.62%
Japan 27,334 +1.20%
United Kingdom 7,335 -1.01%
Name Value Chg %
Commodities (USD)
Gold 1,993.70 +3.68%
Iron Ore 130.00 -
Copper 3.895 +0.79%
WTI Oil 66.34 -2.94%
AUD/USD 0.6715 +0.17%
Bitcoin (AUD) 41,986 +2.90%
Ethereum (AUD) 2,699 +0.96%
US 10 Yr T-bond 3.395 -5.30%
VIX 26 +10.96%

US Sectors

Mon 20 Mar 23, 8:28am (AEDT)

Sector Chg %
Information Technology -0.11%
Communication Services -0.47%
Consumer Staples -0.60%
Utilities -0.98%
Consumer Discretionary -1.24%
Health Care -1.26%
Energy -1.53%
Materials -1.54%
Industrials -1.63%
Real Estate -2.27%
Financials -3.29%


SPX chart
A weaker day for the S&P 500 as banks extended declines (Source: TradingView)


  • S&P 500 finishes the week up 1.4% but financials beginning to slump again

  • Nasdaq on track for its best week in four months as tumbling yields and speculative activity boosts demand for growth stocks (Bloomberg)

  • US 2-year yield tumbled 32 bps to 3.85%, the lowest since September 2022

  • Gold rallied 3.5%, up 6.5% last week for its best weekly gain since November

  • Financial conditions tighten as spreads on lowest-rated debt jump to over 1,000 bp, leverage loans plunge to ten-week low (Bloomberg)

  • Money market funds experience biggest inflow since pandemic shock (Bloomberg)


  • UBS to buy Credit Suisse in $3.25bn deal to end crisis (Bloomberg)

  • UBS has offered to buy Credit Suisse for up to $1bn in stock, representing a discount of more than 85% to closing share price last week (FT)

  • UBS wants to voids deal if Credit Suisse credit default swaps jump by 100 bp or more and pushing for protection from government from any pending legal cases and regulatory investigations into Credit Suisse (FT)

  • Switzerland weighs full or partial nationalisation of Credit Suisse if UBS takeover attempt fails (Bloomberg)


  • Midsize banks ask FDIC to insure deposits for two years (Bloomberg)

  • First Republic gets $30bn of fresh deposits in bank rescue (Bloomberg)

  • US government struggling to find buyer for SVB (Bloomberg)

  • Banks borrow $165bn from Fed in rush to backstop liquidity (Bloomberg)

  • Warren Buffett in contact with Biden Team on banking crisis (Bloomberg)

  • Moody's follows S&P and Fitch by cutting First Republic to junk Bloomberg)


  • US consumer sentiment deteriorates in March, inflation expectations fall (Reuters)

  • China cuts banks’ reserve requirement ratio by 25 bps from 27 March in an effort to stimulus the economy and lower funding costs for businesses (Bloomberg)

  • Credit Suisse rescue gives ECB confidence to hike rates (Reuters)

  • Fed facing calls to pause rate hikes after recent banking sector turmoil has tightened financial conditions by the equivalent of 150 bps in rate hikes (Reuters)

  • RBA rate hike near as jobless rate drops to 3.5% (The Australian)

Industry ETFs

Mon 20 Mar 23, 8:28am (AEDT)

Description Last Chg %
Silver 19.92 +3.56%
Gold 178.57 +2.90%
Nickel 31.0099 +1.10%
Uranium 19 +0.74%
Copper Miners 35 +0.63%
Strategic Metals 75.06 -0.45%
Aluminum 47.5549 -0.85%
Lithium & Battery Tech 59.41 -1.45%
Steel 60.26 -1.96%
Global Jets 17.86 -1.90%
Aerospace & Defense 112.92 -2.18%
Cannabis 9.36 -0.59%
Biotechnology 126.74 -1.77%
Description Last Chg %
Bitcoin 15.41 +7.82%
Hydrogen 10.82 -3.33%
Solar 72.25 -3.93%
CleanTech 15.08 -4.11%
Video Games/eSports 49.64 -0.04%
Semiconductor 428.09 -0.62%
Cybersecurity 22.26 -0.67%
Robotics & AI 23.99 -0.96%
Sports Betting/Gaming 15.46 -0.97%
E-commerce 17.15 -1.08%
Cloud Computing 17.19 -1.34%
FinTech 20.18 -1.34%
Electric Vehicles 22.55 -1.64%

Deeper Dive

UBS and Credit Suisse

UBS has agreed to buy Credit Suisse, here are the final terms:

  • UBS will pay about 0.76 Swiss francs a share in its own stock, worth US$3.2bn

  • This is up from a big of 0.25 Swiss francs earlier today

This default risk isn't gone as UBS credit default swaps have more than doubled since the news broke.

"Let me be very specific on this: UBS intends to downsize Credit Suisse’s investment banking business and align it with our conservative risk culture. We will be de-risking a lot of the tricky businesses that we are inheriting," said UBS Chairman Colm Kelleher. We'll provide a deeper dive into this fiasco in tomorrow's Morning Wrap.

Oil: Supply, Demand and China

Oil prices collapsed 13.6% last week, marking one of its worst weekly performances since March 2020.

Oil price chart
WTI weekly chart (Source: TradingView)

OPEC notes that supply has been outpacing demand since the second quarter of 2022 but expects demand to outperform in the second half of this year.

OPEC outlook
Source: OPEC

The energy cartel also upgraded its demand outlook for China. This view is in-line with recent projections from Goldman Sachs, which cited:

  • "The rapid improvements in domestic mobility and solid January-February activity data suggest China's post reopening recovery appears stronger than our previous expectations, thanks mainly to the frontloading of reopening impulse and fiscal support."

  • "These adjustments boost our 2023 full-year GDP growth forecast to 6.0% year-on-year from 5.5% previously."

  • Though the frontloading of stimulus resulted in a downgrade to 2024 forecasts to 4.6% from 5.0%

OPEC china outlook
Source: OPEC

Markets: Bracing for something big

The S&P 500 ETF experienced $7.3bn of inflows last Friday, marking its biggest inflow since the vaccine news hit in October 2020 and its sixth largest over the last decade, according to Bloomberg.

Paradoxically, there were 37.4m put option contracts traded last Friday, the largest on record.

What does this potentially signal: Protective puts against a long equity bet aka a hedge against a catastrophic selloff for markets.

Sectors to Watch

In this kind of market, there's not a whole lot to look at. The VIX is starting to spike again and we have the Fed's rate decision later this week. Brace yourself. This market isn't for the faint hearted.

Tech: Over the last 10 sessions, the Goldman Sachs Basket of Mega Cap Tech stocks is up 6.3% while the Russel 2000 is down 10.5%. The performance spread is the second highest on record. Does this mark tech (or big tech) as a temporary safe haven? Or, is this weakness that investors should fade as it catches down to the weakness across the rest of the market?

Gold: Gold is going ballistic as the US dollar and bond yields tumble. That said, several ASX-listed gold miners have struggled from an operational perspective, especially names like Northern Star (ASX: NST) and Evolution Mining (ASX: EVN).

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Duratec (DUR) – $0.01, NRW Holdings (NWH) – $0.085, Mcpherson’s (MCP) – $0.02, DDH1 (DDH) – $0.033, Hub24 (HUB) – $0.14, Adairs (ADH) – $0.08

  • Dividends paid: Endeavour Group (EDV) – $0.143

  • Listing: None

Economic calendar (AEDT):

  • 12:15 pm: China Loan Prime Rate

  • 6:00 pm: Germany Producer Price Index

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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