Global equities subdued amid banking woes and economic fears

US equities finished in positive territory in a volatile session on Thursday, as investors tried to recover from Wednesday’s sell-off.  The Dow added more than 75 points, while the S&P and the Nasdaq were up 0.3% and 1%, respectively.  Tech shares led the gains, namely Microsoft, Nvidia, Meta and Apple, amid declines in Treasury yields while bank shares were the main source of pressure.  In Europe, equity markets closed lower yesterday, as investors digested interest rate hikes from central banks.  The banking sector fell more than 2% after Citigroup downgraded Europe’s banking sector rating to “neutral” from “overweight”, saying the likely continued monetary tightening adds to worries stemming from the turmoil in the global banking sector. 

Summary as at 24.03.2023 

• Asian equity markets fell on Friday as comments from US regulators failed to entirely quell fears of a banking crisis, while concerns over slowing economic growth also dented sentiment.  Investors also reacted to data showing Japan’s annual inflation rate retreated sharply from 41-year highs, reflecting easing global inflationary pressures and slowing economic activity worldwide.  Shares in Australia, Japan, South Korea, Hong Kong, and mainland China all declined. 
• European shares are poised for declines while US equity futures were seen flat this morning on lingering concerns over the health of the global banking system. 
• Oil prices fell this morning, extending losses from the prior session as US officials said it will be difficult to immediately refill the country’s Strategic Petroleum Reserve, while uncertainty over OPEC production also weighed. 

• Treasury Secretary Janet Yellen told US lawmakers that regulators would be prepared for further steps to protect the banking system if warranted, a day after her remarks on nationwide deposit insurance rattled markets.   
• The Bank of England raised its key bank rate by 25bps to 4.25% during yesterday’s meeting, in line with market expectations.  Inflation is still likely to fall sharply over the rest of the year and to a lower rate than anticipated in February, but policymakers warned that if there were to be evidence of more persistent pressures, then further tightening would be required.  On the recent banking crisis, the central bank noted that the UK banking system maintains robust capital and strong liquidity positions and remains resilient. 
• Hindenburg Research on Thursday disclosed short positions in Block Inc and alleged that the payments firms overstated its user numbers and understated its consumer acquisition costs.  It also said the shares have a downside of 65% to 75% “on a purely fundamental basis.”  The company denied the allegations and said it plans to explore legal action against the short-seller.