Wall Street witnessed a frightening sell-off this week as the collapse of Silicon Valley Bank (SIVB:NASDAQ) and Signature Bank (SBNY:NASDAQ), the second and third biggest bank failures in US history, was followed more problems at Credit Suisse (CSGN:SWX) and First Republic (FRC:NYSE).
No wonder investors were left fearing another systemic financial collapse like in 2008. For now, there is little evidence of widespread problems - they seem to be contained within a small handful where risk controls have been poorly managed, but bailouts will not chime well with financial markets amid talk of ‘moral hazard.’
Major US indices recovered much of their earlier losses, and tech has done well out of the troubles, with the Nasdaq Composite rallying nearly 3.5% over the past week.
While smaller regional banks have been hit hardest, even the majors have lost billions in market cap. Shares in Citigroup (C:NYSE), Goldman Sachs (GS:NYSE) and Morgan Stanley (MS:NYSE) all saw declines of 5% to 7% over the past week.
Jamie Dimon-led JPMorgan Chase (JPM:NYSE), regarded as one of the highest-quality banks with a fortress balance sheet, actually nudged 1.5% higher during the chaos.
On the economic data front, US CPI slowed to a 6% annual rate in February and PPI cooled to 4.6% from 5.7% in January, demonstrating that inflation has slowed across the pond due to earlier interest rate hikes from the Federal Reserve, which now has cause to reconsider its rate hiking agenda.
Oil prices plunged to a three-month low on the inflation news and the US bank failures, the latter stoking fears that a fresh financial crisis could reduce future demand for black gold.
ADOBE
It's not all roses in the garden, what with the proposed $20 billion purchase of Figma held up by regulatory hurdles, yet Adobe (ADBE:NASDAQ) is bucking the trend across much of tech by upping its financial targets for this year.
The software suppliers to creative industries reported record fiscal 2023 Q1 revenues of $4.7 billion, up 9% year-on-year, while EPS (earnings per share) of $3.80 surged beyond forecasts pitched at $3.68. forecasts of $3.68 from Refinitiv analysts. Adobe shares price traded up as high as 5% after hours.
That saw the stock rally 6% in response.
Adobe chairman and CEO Shantanu Narayen singled out Adobe's Creative Cloud, Document Cloud and Experience Cloud offerings as ‘mission-critical in fueling the global digital economy’.
ILLUMINA
US gene sequencing giant Illumina (ILMN:NASDAQ) saw its shares jump 15% this week after activist investor Carl Icahn revealed a 1.4% stake and launched a proxy fight to gain board seats.
The billionaire investor is looking to appoint three directors to Illumina's board after talks with management broke down.
Icahn has criticised Illumina's decision to forge ahead with the $7 billion purchase of cancer screening and monitoring company Grail in 2021 in the face of regulatory uncertainty.
In December 2022 the European Union ordered Illumina to unwind the deal three months after opposing the acquisition on grounds it could damage consumer choice.
The company is appealing the EU's decision and said on Monday it will divest Grail if it loses the challenge. Icahn argues the company could lose $800 million in annual operating expenses if the deal is not unwound.
Illumina's shares have lost around 57% of their value since announcing the acquisition Grail in August 2021.
FEDEX
Deliveries and logistics play FedEx (FDX:NYSE) is closely watched by all investors because of the breadth and depth of its operations and how closely tied they are to economic activity.
In this sense the company's latest quarterly numbers were bad news for the wider market but more positive for the company itself. The shares enjoying double-digit gains as EPS came in significantly ahead of expectations as the company slashed costs.
EPS for the third quarter came in at $3.41 versus the $2.73 expected and the company now expects EPS of between $14.60 and $15.20, up from previous guidance of between $13 and $14.
However, revenue was a smidge below what had been pencilled in at a little more than $22 billion as the company saw demand weakness. Investors will get a fuller update on corporate strategy at an investor event on 5 April.
