US futures rise, dollar falls as sentiment turns: markets unwind

(Bloomberg) — US stock futures rose and the greenback weakened slightly against major currencies early Monday as investors weighed UBS Group AG’s approval to buy Credit Suisse Group AG. and central bank moves to increase dollar liquidity.

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The Swiss franc was little changed, the yen pared an initial rise and risk-sensitive currencies like the Australian and New Zealand dollars made small gains. The euro and the pound also rose.

Futures for the S&P 500 rose about 0.3% after the index fell more than 1% on Friday, dragged lower by the financial sector. First Republic Bank, the latest US lender to signal stress, fell over 70% on the week, although the bigger banks threw a lifeline to the regional lender on Thursday.

Contracts for the Nasdaq 100 were also up about 0.4% after the index posted its best week since November, up 5.8%, despite a tumble on Friday. Technology stocks, which often benefit from lower interest rates, were supported by concerns that the turmoil in the banking sector would plunge the global economy into recession, forcing central banks to reverse course on monetary tightening.

Investors continue to debate whether the Federal Reserve will make another quarter-point hike or pause at its March 21-22 meeting. Traders are no longer seeing much chance for a larger half-point hike that Chairman Jerome Powell put on the table just before financial stability concerns were raised.

Australian and New Zealand bond yields fell less than 10 points after rates fell across the US debt market curve on Friday. The policy-major two-year Treasury yield, which fell more than 30 basis points on Friday, fluctuated more than 20 basis points for a seventh straight day as traders recalibrated their bets on rate hikes. A weaker than expected inflation expectations number on Friday added downward pressure on yields.

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Policymakers are scrambling to boost confidence following the collapse of Silicon Valley Bank, and problems at Credit Suisse have heightened public concerns about financial stability.

UBS’s government-backed takeover of Credit Suisse is aimed at managing client outflows and a massive drop in the target company’s stocks and bonds.

Meanwhile, the Fed and five other central banks announced coordinated measures to increase liquidity in US dollar swap agreements in a bid to ease tensions in the global financial system.

Elsewhere in the markets, Bitcoin was trading near its highest levels since June amid a broad rally in cryptocurrencies.

These are the main market movements:

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• S&P 500 futures were up 0.3% as of 7:05 a.m. Tokyo time. The S&P 500 fell 1.1% on Friday

• Nasdaq 100 futures were up 0.4%. The Nasdaq 100 fell 0.5% on Friday

• Nikkei 225 futures down 1.1%

• Australia’s S&P/ASX 200 index futures fell 1.4%

• Hang Seng index futures down 1.7%

currencies

• The euro rose 0.1% to $1.0686

• The Japanese yen was little changed at 131.78 per dollar

• The offshore yuan was little changed at 6.8849 per dollar

• The Australian dollar rose 0.3% to $0.6719

• The Swiss Franc was little changed at 0.9259

cryptocurrencies

• Bitcoin rose 0.5% to $28,116.17

• Ether was up 0.1% to $1,801.51

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raw materials

• West Texas Intermediate Crude fell 0.4% to $66.45 a barrel

• Spot gold rose 3.6% on Friday to $1,989.25 an ounce

This story was created with the support of Bloomberg Automation.

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