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A rally ahead of the Fed meeting
European indices ended with strong gains >+1.5%, with the Ibex standing out again (+2.5%) after returning to the 9,000-point level with the rally of banks. Thus, in the Euro STOXX Banks and Insurance led gains for the second straight session vs. Retail and Technology that were among the few sectors ending in negative territory. On the macro side, in Germany, March’s ZEW dropped more than expected, hit by the uncertainties surrounding the banking sector and liquidity problems. From the ECB, Nagel stated that the fight against inflation is not over, and he is in favour of speeding up the QT starting in June’23. In the US, February’s existing home sales climbed although prices fell for the first time in almost 11 years. The secretary of the treasury, Janet Yellen, left the door open to increasing measures if the spread threatens smaller banks’ deposits, despite stressing that the banking system is stabilising. Although no specific mention was made, the possibility of temporarily expanding federal deposit insurance to all deposit holders is on the table, to which the Republican party would be opposed. In China, the start of official talks between Jinping and Putin focused on the Ukraine peace plan and economic cooperation.
What we expect for today
European stock markets would open with slighter gains, consolidating the levels reached yesterday and awaiting the Fed’s decision. In this regard, the market is pricing in a +25bps rise in J. Powell’s speech on the banking uncertainty. Fed Funds futures suggest maximum rates in May’23 (5.00%-5.25%) before possible cuts in the 2H’23. Currently, S&P futures are down -0.05% (the S&P 500 ended +0.58% higher vs. the European closing bell). Volatility in the US fell (VIX 21.38). Asian markets are rising (China’s CSI 300 +0.16% and Japan’s Nikkei +1.94%).
Today we stress the Fed meeting and the update of the economic forecasts, the Bank of Brazil will also meet, and in the UK we will learn February’s inflation.
IBERIAN DAILY 22 MARCH (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: BANKING SECTOR, TAX TO THE BANKING AND ENERGY SECTORS.A rally ahead of the Fed meeting
European indices ended with strong gains >+1.5%, with the Ibex standing out again (+2.5%) after returning to the 9,000-point level with the rally of banks. Thus, in the Euro STOXX Banks and Insurance led gains for the second straight session vs. Retail and Technology that were among the few sectors ending in negative territory. On the macro side, in Germany, March’s ZEW dropped more than expected, hit by the uncertainties surrounding the banking sector and liquidity problems. From the ECB, Nagel stated that the fight against inflation is not over, and he is in favour of speeding up the QT starting in June’23. In the US, February’s existing home sales climbed although prices fell for the first time in almost 11 years. The secretary of the treasury, Janet Yellen, left the door open to increasing measures if the spread threatens smaller banks’ deposits, despite stressing that the banking system is stabilising. Although no specific mention was made, the possibility of temporarily expanding federal deposit insurance to all deposit holders is on the table, to which the Republican party would be opposed. In China, the start of official talks between Jinping and Putin focused on the Ukraine peace plan and economic cooperation.
What we expect for today
European stock markets would open with slighter gains, consolidating the levels reached yesterday and awaiting the Fed’s decision. In this regard, the market is pricing in a +25bps rise in J. Powell’s speech on the banking uncertainty. Fed Funds futures suggest maximum rates in May’23 (5.00%-5.25%) before possible cuts in the 2H’23. Currently, S&P futures are down -0.05% (the S&P 500 ended +0.58% higher vs. the European closing bell). Volatility in the US fell (VIX 21.38). Asian markets are rising (China’s CSI 300 +0.16% and Japan’s Nikkei +1.94%).
Today we stress the Fed meeting and the update of the economic forecasts, the Bank of Brazil will also meet, and in the UK we will learn February’s inflation.
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Sabadell
Research Department
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