Regional banks’ stock prices have increased.
With investors anticipating the Federal Reserve’s interest rate announcement, US markets are expected to open higher today.
Since UBS’s acquisition of Credit Suisse and the central banks’ announcement of extra liquidity, market sentiment has strengthened. The United States regional banks, which have also appeared vulnerable in recent trading sessions, are bouncing back.
The market has been extremely volatile over the previous 10 days because of the ongoing financial crisis, so investors are hopeful this will put an end to that. It’s too soon to tell if this is the end of the crisis or merely a respite before other issues arise. However, the swift action taken by central banks and the government has clearly boosted the market.
With the recent banking upheaval, all eyes are on the Federal Reserve’s 2-day monetary policy meeting, which begins today. The central bank is likely to agree on a rate rise of 25 basis points, which is significantly less than the initial expectation of a rate hike of 50 basis points.
According to Christine Lagarde, head of the European Central Bank, “financial stability tensions could have an impact on demand and may actually do the work that would otherwise be done by monetary policy and interest rate hikes” earlier this week.
On the statistics front, February’s existing home sales in the US are forecast to rise 5.5% month-over-month and 4.2% annually, both significant increases from January’s 0.7% drop.
US futures
- Dow futures +0.96% at 32535
- S&P futures +0.86% at 3984
- Nasdaq futures +0.51% at 12630
In Europe
- FTSE +1.76% at 7530
- Dax +1.85% at 15200
- Stocks, including regional lenders rise as banking crisis fears ease
- FOMC meeting begins
- Nike reports after the close
- EUR rebounds on banking optimism
- Oil rises after steep losses as recession fears calm
Business headlines
Following an offer of assistance in developing a stability plan from JPMorgan Chase & Co., shares of First Republic Bank have risen by 20% in premarket trading after dropping by 90% in recent sessions. Western Alliance Bancorp and PAC W Bancorp are two more regional lenders that have been on the upswing recently.
Meta stock price increases as Morgan Stanley upgrades it to overweight from equal weight and says it has the potential for 25% further growth.
Expect an update from Nike after the market closes. Earnings per share are predicted to decrease by 36.7% to $0.55c on sales growth of 5.5% to $11.47 billion.
What will happen to the S&P 500 next?
A year-long dropping trend line, the 100-day and 200-day simple moving averages, and the March low of 3808. However, the price recovered lower after encountering rejection at the 100 sma at 3957. In addition to the bullish crossing on the MACD, the RSI is also trying to break out above 50, giving investors hope for more gains. In order to push prices higher towards 4075 and set a new high, buyers will need to see prices break above the 4,000 psychological threshold and the 50 sma at 4020. If prices drop below 3935, where the 200 SMA is providing support, the short-term uptrend will be rendered invalid.
Markets for foreign exchange show a declining US dollar and a rising Euro.
As the Federal Reserve’s two-day meeting begins today, investors’ focus is shifting from the banking sector to the rate decision. With investors fearful that the Federal Reserve would decrease the pace of rate rises or even freeze rate hikes in response to signs of stress in the banking sector, demand for the US dollar as a safe haven has been low.
The Euro against the Dollar (EUR/USD) is on the rise as traders and investors celebrate the upbeat market sentiment and diminishing bank contagion worries. Despite the German ZEW economic mood index falling by more than predicted 213 in March (from 28.1 in February), investors have shrugged it off. The banking crisis’s effect on consumer mood made this worse than the 17.1 predicted. Investors are ignoring the negative data point because of the swift response from central banks and governments.
After hitting resistance at a five-week high, the GBP/USD is now trending downward. Government expenditure reached an all-time high in February, according to the data, thanks to the energy stimulus. Despite an increase in tax revenue and a decrease in debt service costs, the budget deficit increased.
- EUR/USD +0.58% at 1.0779
- GBP/USD -0.2% at 1.2250
The price of oil increases after a precipitous drop.
For the second day in a row, oil prices have risen as the market sentiment improves following the UBS Credit Suisse transaction. The oil demand forecast has improved, at least temporarily, as worries about a financial crisis and recession have subsided.
Oil dropped by more than 10% in a single week due to concerns about the financial system and the economy. Oil prices have risen this week by 2.5 percent.
The market is anticipating a drop in crude and product stockpiles in the next API inventory report.
Next up is tomorrow’s interest rate announcement from the Federal Reserve. In April, OPEC will have its next meeting.
- WTI crude trades +1.2% at $66.50
- Brent trades at +1.2% at $74.30
