SVB Contagion Fears Hit Markets
US financial stocks have seen a sharp shift in sentiment this week. Hawkish comments from Fed’s Powell earlier in the week have fuelled expectations of a larger .5% hike from the Fed when it meets later this month. However, the main driver of losses this week was the market reaction to news yesterday that Silicon Valley Bank is looking to plug a roughly $1.75 billion loss linked to the losses suffered on covering a bond portfolio.
JPM Investors Panicked
The news fuelled a swift move lower in SVB shares which fell over 60% on the day. With fears that the bank could go under, US banking stocks are dealing with contagion fears and the risk of a much deeper fallout. JP Morgan shares were seen cratering lower by more than 7% on the day as US banking stocks suffered widespread losses. JPM shares are now down more than 14% from YTD highs and with a court ordering yesterday that JP CEO Jamie Dimon turn over more documents relating to his involvement with Jeffery Epstein, investor sentiment is weakening quickly.
Downside Risks
Looking ahead, JPM shares look vulnerable to further losses around today’s US jobs data and with the SVB situation ongoing. Unless jobs fell back drastically last month and there is a swift resolution to the SVB crisis, bearish pressure is likely to continue near-term.
Technical Views
JPM
After stalling along the 142.12 level resistance over the last two month, JPM shares are now pulling away lower. Price has broken down through the rising trend line and is now testing the 128.58 level support. With momentum studies turned bearish, the focus is on a further move lower with a break of current support opening the way for 116.02 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.