US equity markets finished lower overnight, in a broad sell-off after Moody’s cut the credit ratings of 10-small to mid-sized US banks, reigniting fears about the health of the US banks and the economy. The Dow Jones closed 159 points lower (-0.45%), well off worst levels. Dow down 466 points at worst. S&P 500 dipped 0.42%, and the NASDAQ lost 0.79%. After a five-month rally this year, the S&P 500 and the NASDAQ were 5% off their lifetime highs, August has now recorded five losing sessions out of six. S&P 500 down 2% this month, with the NASDAQ falling 3.2%. Treasuries rallied with some curve flattening, the 3Y auction was well received. USD Index rose 0.47% after disappointing Chinese trade figures led investors to safer assets and the VIX at one point hitting a two-month high before closing up 1.4%. On the earning front, UPS off 0.88% after the company cut its 2023 revenue and margin forecast. Eli Lilly led the healthcare sector higher, +14.91% on upbeat earnings and outlook.

• ASX to edge lower. SPI Futures down 5 points (-0.07%).

Moody’s bank downgrades and warnings have put renewed scrutiny on banking sector stresses. Moody’s cut ratings to 10 small- to mid-sized lenders by one notch and placed six banking giants, including Bank of New York Mellon, US Bancorp, State Street, and Truist Financial, on review for potential downgrades. Moody's also warned that the sector's credit strength would likely be tested by funding risks and weaker profitability.

• Russell 2000 -0.59%
• S&P 500 Banks index has slipped 2.5% YTD vs 17.2% gain by the S&P 500.
• KBW Regional Banking index dipped 1.39%.
• Gold dropped 0.60% near a one-month low as the USD rallied.
• Copper fell 2.47% to lowest in almost a month on weak Chinese trade data.
• Nickel -1.09%, Aluminium -1.26%, Zinc -1.28%, Lead -0.54%, Tin -1.91%
• WTI and Brent rose 1.22% and 0.26% on US economic growth outlook.
• 10Y Bond Yields mixed: US 4.03%, Australia 4.00%, and Germany 2.44%.

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