Five things you need to know before the market opens on Friday March 17:
1. -- Stock Futures Waver As Bank Rescues Fail To Ease Contagion Fears
U.S. equity futures edged modestly lower Friday, while the dollar slipped lower against its global peers and Treasury bond yields remained stable, as investors drew a cautious sigh of relief from the rescues of Credit Suisse and First Republic while bracing for a potentially volatile session to close out a difficult week.
The early Thursday lifeline thrown to Credit Suisse, which included lending and liquidity commitments of around $54 billion, has helped stem contagion concerns in the European banking sector, while last night's coordinated plan to pump $30 billion in deposits into First Republic Bank has mollified worries about the safety of regional lenders in the world's biggest economy.
The twin supports, however, are starting to show some cracks, with Credit Suisse debt still trading at distressed levels in European dealing and First Republic unveiling worrying financial details following the JPMorgan-lead boost.
Yesterday's move by the European Central Bank to lift its three benchmark interest rates by 50 basis points, even in the face of a simmering financial crisis, has also suggested that monetary authorities are comfortable -- for the most part -- in leaving the financial system to repair and stabilize itself.
That said, banks have found solace in the Fed's myriad lending programs, with U.S. financial institutions borrowing a record $152.8 billion from its Discount Window over the week ending on March 15, a massive leap from the $4.58 billion taken out during the prior period.
The CME Group's FedWatch, however, now suggests an 88% chance that the Fed will lift rates by 25 basis points next week, following data showing weekly jobless claims fell by 20,000, a much larger-than-expected decline that took the overall tally to just 192,000, and February housing starts rose 9.8% to an annualized rate of 1.45 million.
Friday's session, however, may be more influence by the expiry of around $2.7 trillion in equity derivatives -- a process known as triple-witching hour -- amid a week of heightened volatility and a noted surge in volumes.
For the moment at least, however, market volatility looks to have subsided, with the CBOE Group's VIX index falling 12% in the overnight session to 23.00 points, down some 26% from its Monday afternoon peak, suggesting traders see daily swings on the S&P 500 of around 57 points, or 1.44%, over the near term.
Elsewhere, benchmark 2-year Treasury note yields were pegged at 4.153% in overnight trading, up 43 basis points from the six-month low of 3.72% reached earlier this week but still on pace for the biggest weekly decline since February 2020. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.23% lower at 104.140.
Futures contracts tied to the S&P 500, which had its best single-day session in two months last night, are indicating a 3 point opening bell dip while those linked to the Dow Jones Industrial Average were looking at a 55 point decline. The tech-focused Nasdaq is looking at 10 point pullback.
In overseas markets, Europe's Stoxx 600 gained 0.68% in early Frankfurt trading while Britain's FTSE 100 was marked 0.90% higher in London.
Overnight in Asia, the region-wide MSCI ex-Japan index was marked 1.52% higher in a follow-on rally from Wall Street while the Nikkei 225 closed 1.2% higher in Tokyo
2. -- First Republic Shares Slide As Cash Worries Mar $30 Billion Deposit Boost
First Republic FRC retreated in pre-market trading after a coordinated rescue of the San Francisco-based lender late Thursday was marred by concerns over the strength of its balance sheet.
First Republic said in a Securities and Exchange Commission filing that its cash position was pegged at around $34 billion prior to the promise of an additional $30 billion from a consortium of 11 banks lead by JPMorgan Chase CEO Jamie Dimon in coordination with the Federal Reserve and the U.S. Treasury.
The group also said it had borrowed $119 billion over the past week from both the Fed's new lending backstop program and the Federal Home Loan Bank. Around 70% of its deposits are uninsured, as well, given it deals with wealthy individuals whose savings top the $250,000 limit set by the Federal Deposit Insurance Corp.
Late Thursday, a collection of the biggest U.S. banks agreed to deposit as much as $30 billion in First Republic, agreeing to leave the cash for at least 120 days while earning the same daily interest as current First Republic clients in an effort to shore-up confidence in the broader financial system,
First Republic shares, which ended the Thursday session 10% higher but were halted from trading 17 times, were marked 3.7% lower in pre-market trading to indicate an opening bell price of $33.03 each.
3. -- Boeing Edges Higher After Resuming 787 Dreamliner Deliveries
Boeing (BA) shares edged higher in pre-market trading after the planemaker confirmed it had resumed deliveries of its flagship 787 Dreamliner this week following a halt in late February linked to issues with a fuselage component.
Boeing said it handed over one of its Dreamliners to German carrier Lufthansa in Seattle Thursday following clearance from the Federal Aviation Administration to resume deliveries following extended safety checks.
Boeing, which has received commitments for the sale of more than 200 787 Dreamliners over the past two months, including a $37 billion deal with Saudi Arabia earlier week, now has an overall aircraft order book that is approaching half a trillion dollars.
Boeing shares were marked 11.1% higher in pre-market trading to indicate an opening bell price of $226.65 each.
4. -- FedEx Shares Soar As Cost Cuts Drive Q3 Earnings Beat, Profit Forecast Boost
FedEx (FDX) shares surged higher in pre-market trading Friday after the package delivery group posted stronger-than-expected third quarters and boosted its full-year profit forecast.
Cost cutting helped FedEx drive adjusted earnings to $3.41 per share, well ahead of the Street consensus forecast of $2.72 per share as revenues falling 6% to $22.74 billion in what CEO Raj Subramaniam called a "challenged demand environment".
Looking into the final months of the group's fiscal year, which ends in May, FedEx said it sees adjusted earnings in the region of $14.60 to $15.20 per share, up from its prior forecast of between $13 and $14 per share.
The team delivered outstanding service throughout and following peak despite significant weather disruptions across the United States," Subramanian told investors on a conference call late Thursday. "Importantly, our third-quarter results also reflect our continued progress on the fundamental transformation of FedEx as we moved with urgency to realign our cost structure."
FedEx shares were marked 11.1% higher in pre-market trading to indicate an opening bell price of $226.65 each.
5. -- NBA Legend Michael Jordan To Sell Majority Stake in Charlotte Hornets
Basketball legend Michael Jordan is looking to sell a majority stake in the NBA's Charlotte Hornets, according to multiple media reports, but is likely to remain a minority owner in his home-state franchise.
Jordan, who purchased his stake in the Hornets in 2010 for around $275 million, is reportedly in late-stage discussions with a small consortium lead by Hornets minority owner Gabe Plotkin, the founder of Melvin Capital Management and Atlanta Hawks minority owner Rick Schnall, who is also co-president of New York based private equity group Clayton, Dubilier & Rice.
No terms have been disclosed, but the baseline price for NBA teams has risen considerably over the past five years, with United Wholesale Mortgage CEO Mat Ishiba leading a $4 billion purchase of the Phoenix Suns in December - nearly double the $2.2 billion reportedly paid for the Houston Rockets gaming and restaurant billionaire Tilman Fertitta.
Jordan's exit from the Hornets would leave the NBA with no Black majority owners involved in any of its 30 franchises.
