Tracking the Hunt: Latest Business Insights on Today’s Markets
The current uncertainty surrounding the banking sector’s stability has kept global markets on edge, triggering big intraday swings in equity and rates markets. Investors are hunting for the next victim of the current turmoil, with Deutsche Bank under the spotlight in Europe. However, authorities on both sides of the Atlantic have reiterated that the US banking system remains sound and resilient.
Regional banks in the US are spurring equity recovery, with the S&P 500 up on both the day and the week. Meanwhile, March PMIs (purchasing managers’ indices) reveal an improvement in the services sector, especially in the eurozone, although manufacturing remains in contraction.
The Federal Reserve has defended its decision to hike interest rates, with speakers stressing the need to curb inflation despite banking jitters. As a result, core yields are lower across the board, with US Treasury products more down on the day but well off their intraday lows.
The USD has been stronger on Friday but has fallen for a third consecutive week. Meanwhile, the AUD and NZD have been the underperformers on the week.
European equities have had a torrid Friday, with regional indices closing over 1% or 2% lower on the day. Deutsche Bank shares fell close to 15% intraday, with credit default swaps widening to levels not seen since the pandemic’s start. However, commentators have maintained that Deutsche Bank has thoroughly reorganized and modernized its business model and is a very profitable bank.
– This week, the Australian retail and CPI indicator, Chinese PMI, eurozone CPI, US PCE, and US House/Senate on bank failures are all upcoming events.
– According to JPMorgan, the estimated cost of global banks complying with regulations has reached $321 billion, with Europe bearing the brunt of the expense.
– DBRS Morningstar has downgraded Air Canada’s long-term rating to BB-, with negative implications due to the airline’s liquidity concerns.
The banking sector remains a cause for concern, but authorities have quickly reassured investors that the system remains sound and resilient. However, the hunt for the next victim continues, and Deutsche Bank has come under heavy selling pressure. While global yields are lower globally, US regional banks are spurring equity recovery. The USD has been stronger on Friday but has fallen for a third consecutive week, while the AUD and NZD are the underperformers.
Investors should remain vigilant in the current market environment, paying particular attention to the banking sector. While authorities have quickly reassured investors, the hunt for the next victim continues. Meanwhile, US regional banks are helping to spur equity recovery, while the USD has been stronger on Friday but has fallen for a third consecutive week. A cautious approach is recommended, with particular attention paid to upcoming events such as the Australian retail and CPI indicator and the US House/Senate on bank failures.