U.S. stocks are trading positive in premarket trading, pointing to a solid opening after Treasury Secretary Janet Yellen spooked investors when she told lawmakers that the government is not considering “blanket” deposit insurance to stabilize U.S. credit institutions. Yellen caused a reversal in stocks after they had initially benefited from growing signs that the Fed had reached the end of its tightening campaign and would soon begin cutting interest rates.
The Bank of England also pushed through another rate hike despite the turmoil in the banking sector, increasing its key interest rate by 25 basis points. The Swiss and Norwegian central banks had also previously raised interest rates and announced further increases to curb still-high inflation. So central banks in Europe have a more hawkish outlook than the Fed, even if they remain on the path of rate hikes. The USD continues to be in the process of normalization against other major currencies. The JPY is experiencing slight headwinds from still hawkish European central banks and improved risk sentiment.
While concerns about banks, especially US regional banks, again drove heavy selling – especially in financials – expectations for rate cuts have intensified, with markets expecting the effective policy rate to fall to around 4.1% as early as December.
We expect interest rate sensitive equities to continue to outperform as they benefit from hopes of looser monetary conditions and the weaker USD.
Emerging market equities rose, another sign that overall risk sentiment remains positive despite yesterday's renewed slump led by bank stocks. Energy prices remain volatile, while gold gained on the prospect of falling interest rates but may see profit taking after sharp gains.
👁 ROB'S MARKET OVERVIEW:
March 23 – 2023
🇺🇸 US Markets ↕️/↗️
Cyclical Stocks ↕️/↗️
Tech/Growth Stocks ↗️
Financial Stocks ↗️ (rebounding from sharp losses)
Defensive Stocks ➡️/↗️
Energy Stocks ➡️/↗️
AUD, EUR ↗️
CAD, GBP ➡️/↗️
USD, JPY ➡️/↘️
⚒ Commodity Markets ↕️
Oil prices ↕️ (still weak but downside limited)
Natural Gas prices ➡️/↗️
Metal prices ➡️/↘️
Precious Metal prices ↕️/↘️ (after gains: volatile, profit taking possible)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Yours, Robert 🇺🇸🏦📉🇬🇧🏦📈