Keeping you up to date with the latest market moves, in association with Investment firm Jarden.
International
US
JPMorgan Chase chief executive Jamie Dimon is leading discussions with other big bank executives about new efforts to stabilise the troubled First Republic Bank.
Discussions initially focused on how the industry could arrange an investment that would increase the bank’s capital, according to people familiar with the matter.
The banks’ own investment in First Republic is among the options.
Last week, 11 major banks came together to deposit US$30 billion (NZ$48b) into First Republic to restore confidence in the lender.
Customers of the San Francisco-based bank have withdrawn about US$70b since the Silicon Valley bank collapsed earlier this month.
Under this plan, banks would convert some or all of the US$30b in deposits into stocks. Alternative options include a sale or foreign capital investment.
Dimon and his peers are trying to instill confidence in a banking system facing its worst crisis in 15 years. Dimon, along with federal regulators, led the effort last week to strengthen First Republic.
Deposit outflows slowed on Friday after a bank-led bailout, but First Republic’s balance sheet still has a big hole to fill.
Amazon says it will cut 9,000 more corporate jobs across units that include its profitable cloud-computing and advertising businesses.
The company previously said it was cutting 18,000 positions.
Last week, Facebook parent Meta Platforms Inc. said it would cut roughly 10,000 jobs over the coming months.
Amazon is the latest tech giant to enact more job cuts than previously expected.
Chief executive Andy Jassy says the company added a significant number of employees in recent years, a step he defended as necessary given what was happening in Amazon’s business at the time.
Amazon has been passing through one of the toughest stretches of its history, with many of its tech peers struggling with growth recently. It also announced it would close eight of its cashierless Amazon Go stores throughout Seattle, New York City and San Francisco on April 1.
Rest of World
Credit Suisse bondholders were in uproar on Monday and the European Central Bank raised concerns after the rescue deal by rival UBS wiped out US$17b of the failed Swiss bank’s bonds, upending debt recovery norms and undermining financial market confidence.
AT1s have grown into a roughly US$260b market since they were introduced in the aftermath of the global financial crisis, as part of regulatory reforms that required banks to increase their capital levels.
The Swiss authorities’ decision to leave AT1 bondholders with nothing has turned upside down the long-established norms of debt investors being prioritised over equity holders in a debt recovery.
Jérôme Legras, head of research at Axiom Alternative Investments, which holds Credit Suisse AT1s, also said wiping out the AT1 holders was a policy mistake by Finma, the Swiss regulator.
US law firm Quinn Emanuel said on Monday it was in discussions with several bondholders “representing a significant percentage of the total notional value of AT1 instruments issued by Credit Suisse” over possible legal action.
Even so, other investors said reversing the market norms could herald a significant reduction in appetite for AT1s.
Prices of risky bank debt in Europe tumbled on Monday morning as markets digested the decision.
AT1s issued by other European banks were down by roughly 10 points in early trade, according to Tradeweb data. UBS bonds traded at 83 cents on the US dollar, and Deutsche Bank AT1s were at roughly 63 cents on the US dollar.
Commodities
After breaking through the US$28,000 mark on Sunday, Bitcoin hit the year’s high of US$28,503 on Monday morning before a slight correction to US$27,983 at the time of writing. The latest rally also means that the price of Bitcoin surged about 70.0 per cent since the start of the year.
Global oil prices logged losses Monday, dropping below US$72 per barrel in intraday trade amid turmoil in the banking sector. The front-month April WTI Nymex was last down 31 cents, or 0.5 per cent, at US$66.43 a barrel.
Australia
Energy company TMK Energy announced a milestone cooperation and an electricity offtake agreement had been signed with Mongol Alt LLC mining operator (MAK).
MAK will purchase the electricity generated from produced gas from the three well Pilot Production Well Program.
In response, TMK’s chief executive Brendan Stats commented: “Close cooperation between MAK and TMK will be mutually beneficial allowing for significant efficiencies and the ability to better utilise the valuable resources of produced water and produced gas.”
Shares closed 13.3 per cent higher at 1.7 cents.
New Zealand
Technology company Eroad has released its Investor day slides ahead of its Investor day to be hosted today.
They announced their hiring of Goldman Sachs to advise it on a strategic review designed to find partners to help it crack the North American market.
The ASX and NZX-listed trucking telematics company said the review aims to “identify partnership options to contribute capital, expertise, and additional market access for Eroad to gain further growth in the North American market”.
It warned there was no certainty the review would lead to any particular outcome or transaction.
The company released a presentation to the market ahead of an investor day it is holding tomorrow, in which it reiterated its earlier guidance.
On February 27, the company narrowed its FY23 revenue guidance to between $159 million and $164m, (from $154m to $164m previously).
The updated guidance was due to delays in the roll-out of products to wholesale restaurant food distributor Sysco (a key North American client) as well as increased one-off and inflationary costs, and the refocusing of Eroad’s research and development programme.
The NZX board announced it had withdrawn its endorsement of Rob Hamilton as chair-elect of the NZX.
Following the announcement of the Austrac proceedings against SkyCity Adelaide in December 2022, the NZX board considered Hamilton’s position.
As a result of Hamilton no longer being the proposed successor to the chair, Hamilton resigned as an NZX Director with immediate effect to help NZX move forward without any distractions relating to this matter.
Hamilton is a former SkyCity Chief Financial Officer.
Coming up today
While there is no scheduled news today for the ASX main board, the Reserve Bank of Australia will publish its monetary policy minutes, providing colour into its decision making process when policy-setting.
In New Zealand, Eroad will host its investor day and Stats New Zealand will publish the trade balance for February 2023.
For more information on the latest market moves, get in touch with Jarden.
The Jarden Brief is provided for general information purposes only. It reflects views and research available at the time of publication, using external sources, systems and other data and information we believe to be accurate, complete and reliable at the time of preparation. We make no representation or warranty as to the accuracy, correctness and completeness of that information, and will not be liable or responsible for any error or omission. The Jarden Brief is not to be relied upon as a basis for making any investment decision. Please seek specific investment advice before making any investment decision. Jarden Securities Limited is an NZX Firm. A financial advice disclosure statement is available free of charge at https://www.jarden.co.nz/our-services/wealth-management/financial-advice-provider-disclosure-statement/.
Full disclaimer available at: https://www.jarden.co.nz/wealth-sales-and-research-disclaimer
All market pricing and announcements are sourced from Refinitiv, NZX and ASX.
NZ GDP falls 1% in September quarter; analysts expected 0.4% decline.