Equities poised to extend gains as worries over the banking sector recede

US equities rose on Monday as investors took heart from ongoing efforts to patch up a banking system battered by increasingly challenging monetary conditions.  Regional banks gained with the First Republic Bank jumping 12.1%, following news that US authorities are considering expanding an emergency credit line for banks.  The Dow Jones Industrial Average rose 0.6%, the S&P 500 gained 0.2%, and the Nasdaq Composite dropped 0.5% after an uptick in Treasury yields spooked investors away from tech and other high-growth equities.  European markets were a bit more buoyant, with the Euro Stoxx 50 up 0.8% led by autos and healthcare shares. 

Summary as at 28.03.2023 

• Most Asian equity markets rose on Tuesday as sentiment improved amid easing fears of a looming crisis, although Chinese shares lagged their peers as a string of weak earnings brewed doubts over a swift economic recovery this year.  Australia’s ASX 200 was the best performer for the day, rising 0.9% as data showed that the county’s retail sales grew slightly more than expected in February, indicating some economic resilience as it grapples with high inflation and interest rates. 
• Shares look set to rise in Europe tracking gains in US equity futures overnight, as concerns over the health of the banking system ease. 
• Oil prices fell slightly this morning after rallying by more than 5% in the previous session, as markets weighed the prospect of tighter near-term supply against growing political disruptions in parts of Europe.  Crude markets shot on Monday after reports said that about 450,000 barrels per day, or 0.5% of global oil supply from Kurdistan was stopped after an arbitration case confirmed that Iraq’s consent was needed to ship the oil from Turkey. 

• The Ifo Business Climate indicator for Germany increased to 93.3 in March, the highest since February last year from 91.1 in the previous month and beating market forecasts of 91.  Confidence among businesses rose for a fifth consecutive month, despite the recent banking turmoil, high prices and borrowing costs.  Meanwhile, Ifo economists noted that a winter recession has become more unlikely. 
• Prices in UK stores rose at the highest rate on record this month in a sign that the cost-of-living crisis is far from over.  The British Retail Consortium said shop price inflation accelerated to 8.9%, a fresh peak, and an increase from 8.4% in February.  Food price increases hit 15%, as shoppers are visiting discount grocers to make their money go further, as well as putting fewer items in their baskets. 
• Saudi National Bank, the largest shareholder in Credit Suisse before the bank’s rescue earlier this month, on Monday named a new chairman after the lender suffered significant losses on its investment.  CEO Saeed Mohammed Al Ghamdi will take over as the new chairman from Ammar Al Khudairy, who resigned for personal reasons.  The changes come nearly two weeks after Al Khudairy said the kingdom’s biggest bank by assets would not buy more shares in Credit Suisse on regulatory grounds.