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General Market Analysis 20/03/23

Credit Suisse – UBS Merger Boosts Markets

Asian stocks have had a steady start to the week on the back of news that UBS has stepped in to rescue Credit Suisse. Traders had been expecting a tough open with European and US bourses all closing well in the red on Friday. In the US the Dow closed down 1.2%, S&P 1.1% with the Nasdaq dropping 0.7%. There has not been a huge relief rally at the start of the session and most Asian indices are still in the red but not by the extent that had been expected. Investors now find themselves in the evaluating whether the proactive move to rescue the Swiss giant outweighs the issues that have brought about this situation. 

Gold Surges over 2% to Yearly Highs

Gold surged through resistance levels and previous yearly highs on Friday to trade close to the magic $2000 mark. Fears of further contagion in the banking sector led to investors flooding to the Safe Haven favorite and it took off once it broke through technical resistance levels. News of the Credit Suisse package over the weekend has seen a slight sell off, however it is still sitting above the $1,970 level. Any further news that spooks an already concerned market could see the $2,000 level tested sooner rather than later.

FOMC the Focus for the Week

It is only a few days away but the latest Fed meeting still seems a long way off for some traders as the market continues to be hit with fresh updates on the worlds banking infrastructure. The market is still pricing in a 60% chance of a 25 bps rate hike on Wednesday with rate cuts now firmly priced in for later in the year. However, given the amount of change in expectation that we have seen in this particular meeting’s outcome over the last couple of weeks, we expect to see more volatility around the final outcome with Data still firmly pointing in one direction and market turmoil in the other.

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