Week of worry

Giles Coghlan LLB, Lth, MA Financial Source

This week was a roller-coaster. Monday was a fear fuelled drop for global stocks as worries about contagion from the Silicon Valley Bank (SVB) crisis circulated. Tuesday saw a turnaround for global stocks as markets calmed. Wednesday morning saw a return to risk-off sentiment as European stocks fell on concerns around Credit Suisse and whether it would fail like the SVB. It’s been a week of worry as the results of tighter monetary conditions have impacted markets. So, will this mean that the Fed will not hike interest rates next week? Will the Fed calm things down or keep hiking to bring down high inflation?

Other key events from the past week

Global Stocks: SVB shock, Mar 13: Concern that a large US bank can disappear from one day to the next spooked global equity markets this week. Further news on Wednesday that Credit Suisse would not receive more backing from the Saudi National Bank sent European stocks on a fresh run lower.

FTSE 100: UK budget, Mar 15: The UK announced a ‘back to work’ budget this week with plans to support workers via a £4 billion boost for childcare. However, the UK’s economy is still smaller now than it was before Covid.

EUR: ECB Rate Decision, Mar 16: The ECB had signposted a 50bps rate hike for its interest rate decision, but markets were speculating that the SVB & Credit Suisse crisis would change their mind. In the end, it hiked by 50bps, but removed reference to future hikes. Will this send the EURGBP lower?

Key events for the coming week

USD: Fed in Focus, Mar 22: Intense speculation surrounds the Fed’s rate move next week due to the SVB banking crisis. Some analysts even see the chance of a Fed rate cut. With such uncertainty around the rate meeting expect volatility.

Is silver set to soar? Has silver got more gains ahead?

UK: BoE rate meeting Mar 23: STIR markets now see a 36% chance of no rate increases from the Bank of England meeting next week. Since the SVB banking crisis interest rate expectations have fallen for all the world’s major central banks. Will the BoE reflect this pricing or will it hike over inflation worries?

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Author

Giles Coghlan LLB, Lth, MA

Financial Source

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

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