Dow Jones and S&P
The US stock market is in some state of calm today. The session’s advances came after a consortium of banks said that it would provide $30 billion in deposits to First Republic as a show of confidence in the banking sector. The main indices were also lifted by Credit Suisse’s news that it would borrow up to $50 billion francs (almost $54 billion) from the Swiss National Bank.
Equities are likewise on track to end the week strongly. The Dow is up 1.06% for the week, while the S&P 500 is up 2.56%, putting it on track for its best weekly performance since January. The Nasdaq has gained 5.19%, putting it on course for its biggest week since November
On Thursday, the main averages gained in normal trade. The Dow increased by 371.98 points. The S&P 500 gained 1.76%, while the Nasdaq Composite gained 2.48%.
US Stock Market Today
Futures in the United States and Europe are trading flat, while stock indices are on course to notch their greatest weekly performance since January. The fact that American institutions banded together to preserve First Republic Bank sends a message to speculators that they should be cautious when betting against the US financial system. Their actions have shown that Wall Street banks, as well as policymakers, are prepared to preserve the American financial system.
Yet, traders are concerned about the basic source of this drama, which is the Fed’s anticipated future policy movements. Recall, despite the fact that the ECB was in the midst of turmoil, it boosted interest rates by 50 basis points. The concerted movement to preserve the American bank that we saw on Wall Street yesterday will be tough to replicate in Europe. This is due to the fact that European banks are not particularly robust, and their balance sheets are just strong enough to ensure their own existence. However, HSBC’s decision to purchase SVB UK was audacious, but it differed significantly from the actions taken by JP Morgan, Citi, and others to preserve First Republic Bank. But despite all this, the ECB didn’t hesitate to increase the interest rate by 50 points.
Economic Docket: US Consumer Sentiment
In terms of the economic calendar, yesterday saw the release of US Jobless Claims data, which indicated that the Fed is correct in its assessment of financial circumstances. The figures underlined the strength of the American labour market. Today’s focus is mostly on the US Consumer Sentiment Index, which is predicted to publish a value of 66.9 vs the previous figure of 67. A positive figure is expected to boost the dollar index.
Oil Prices Today: OPEC
Oil prices are stable today after suffering significant losses as investors worried about the financial crisis’s spill over impact. We are still not out of the woods, and it would be incorrect to state that the financial crisis, which started with the collapse of Silver Gate and SVB, has ended, which is why traders are likely to struggle to compute the demand equation for oil. The OPEC summit, which is still a week away, is the most important event in terms of demand and supply for traders. So far, though, two big players, Saudi Arabia and Russia, have kept markets quiet by pledging to keep supplies under control.
Gold Prices Today: Fed Meeting and Hedging
The precious metal is undoubtedly the biggest beneficiary of the ongoing financial crisis, as it is on course to produce its highest weekly performance since November of last year. Gold traders understand that there are still many unknown occurrences that we do not know about, and gold is the ideal alternative for them to gain some hedging.
We feel that any correction in gold prices will continue to be an opportunity for traders and investors, while it is vital to keep the Fed meeting next week in mind. We believe the Fed will raise interest rates by 50 basis points, which many market participants have not factored in, and that this would heighten volatility in US stock markets. Increased volatility and uncertainty may cause traders to stampede for gold.
