Spreadex Market Update
Stocks Rally on News Of Emergency Funding Deals
Global risk sentiment has improved considerably in the last 24 hours. Equities were seen rallying across the board yesterday in response to news that a consortium of US banks will offer $30 billion in emergency funding to struggling First Republic Bank to prevent a further collapse and help shore up confidence in the banking sector. The news comes just after Credit Suisse agreed a CHF50 billion funding deal with the SNB and, given the response we’re seeing in risk markets, looks to have done the job, for now at least.
Key Factors for Today
- USD remains weak risk markets rebound on bank bailout news
- Equities rally across the board on news of funding deals – tech sector leads gains
- NZD rallies as risk sentiment rebound – EUR firmer as ECB hikes by .5%, reassures market it has the tools to cope with banking sector issues
- Metals firmer amidst ongoing USD slide – Crude stabilises, sentiment remains heavy
Coming Up
- EUR – Final CPI
- GBP – Consumer Inflation Expectations
- USD – Prelim UoM Consumer Sentiment
Equities Rally on Banking Sector News
Equities markets roared back yesterday in response to news of the FRB funding deal. Gains were led by the 3.15% rally in the Nasdaq as tech stocks enjoyed solid gains. In Europe, gains were furthered by the ECB holding back on signalling any further hikes. While the bank pressed ahead with a further .5%, no mention was made of future hiking plans which traders have taken as a reassuring sign for now, keeping the focus on banking sector support. A softer US Dollar is also helping add to bullish sentiment today as indices trade in the green across the European open on Friday.
NZD Rises On Risk Rebound – EUR Firmer Following ECB
The improvement in risk appetite into the end of the week has seen the New Zealand Dollar enjoying a surge in demand. NZD has been the best performer across the European open today while USD has been the weakest. EUR has been a little firmer on the back of the ECB meeting yesterday. The bank pushing ahead with a further .5% hike was somewhat unexpected given the current backdrop though traders appear encouraged by the bank’s message that it is monitoring the current situation in the banking sector and will offer support if necessary. Lagarde was also keen to stress that current conditions are different from those in 2008, adding that the ECB has the necessary tools to handle the situation.
Metals Rally, Crude Stabilises
In the metals and commodities space, gold and silver are both seeing better demand today as USD heads lower amidst the rebound in risk appetite. Expectations of a less hawkish outcome from the Fed next week should keep metals supported through the weekend. Crude prices are seeing better demand today also, trading in the green across the European open on Friday. However, still sitting at the foot of recent declines, sentiment remains heavy and futures remain vulnerable to further downside.
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