Markets continue to rebound as investors await the Fed’s next move on interest rates

written on March 22, 2023

US equities climbed for a second straight day Tuesday, with the tech-focused Nasdaq Composite ending near a five-week high, as jitters over bank instability eased. This as Treasury Secretary Yellen said that the US will continue to protect depositors past FDIC insurance thresholds should bank runs resurface. Investors are now preparing for the conclusion of the Federal Reserve’s interest-rates-setting meeting later today when a quarter-percentage-point increase appears likely. The Dow extended gains and closed 290 points higher, while the S&P 500 and the Nasdaq added 1.2% and 1.3%, respectively. In Europe, equity markets also closed higher for a second day, with the Euro Stoxx 50 up 1.5% lead by banks and autos. 

Summary as at 22.03.2023 

  • Asian equities rallied on Wednesday as easing concerns over a banking crisis saw investors pile into discounted financial shares, with focus now turning squarely to a Federal Reserve interest rate decision later in the day. Japan’s Nikkei 225 was among the best performers for the day, rising over 2% in catch-up trade. Other bank-heavy indices also advanced, with Australia’s ASX 200 up 0.9%, while the technology-heavy indices surged, with the Hang Seng in Hong Kong up 2.1% and the Kospi in South Korea rising 0.9%. 
  • European shares look set to open higher while US equity futures as seen flat as investors await the Fed’s next move on interest rates. 
  • Oil prices crept lower in early Asian trade this morning as industry data pointed to another week of rising inventories in the world’s largest crude consumer, while the upcoming Fed meeting spurred cautious plays. Data from the American Petroleum Institute on Tuesday showed US crude inventories rose by about 3.3 million barrels last week. 
  • Existing home sales in the US jumped 14.5% to a seasonally adjusted annual rate of 4.58 million in February, snapping a 12-month slide and representing the largest monthly percentage increase since July 2020. Markets were expecting a smaller 5% rebound. 
  • Japanese Prime Minister Fumio Kishida, making his first visit to Kyiv since Russia’s invasion, offered strong support to Ukraine and invited President Volodymyr Zelenskiy to participate in the Group-of-Seven summit in May, which Japan will host. Kishida made the trip after stopping in New Delhi to pressure Indian Prime Minister Narendra Modi to join other leaders in shunning Russia over its aggression. His trip coincides with a three-day visit by Chinese President Xi Jinping to Moscow for talks with Vladimir Putin, during which Putin hailed Xi’s proposal for ending the war in Ukraine as a potential blueprint.   
  • The Swiss government said it’s temporarily suspending certain kinds of bonus pay for Credit Suisse staff following the state-brokered takeover of the bank by rival UBS. The nation’s governing federal council said in a statement it’s invoking the Swiss Banking Act, which allows it to impose remuneration-related measures “if a systemically important bank is granted direct or indirect state aid from federal funds.”  
  • Nike late Tuesday reported fiscal Q3 results that exceeded Wall Street’s estimates as revenue gains in markets including North America more than offset a drop in China. The company’s EPS fell to $0.79 during the three months that ended 28th February from $0.87 a year earlier but still came in well above consensus expectations of $0.54. Revenue gained 14% to $12.39 billion, higher than the Street’s $11.48 billion view. 
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