BANKING TREMORS
The earth tremors at Credit Suisse finally delivered the shockwave which, over a weekend, vapourised 167 years of history with the takeover of the bank by fellow Swiss Tier One, UBS – much encouraged by the Swiss State in order to avert a disaster scenario. This and the unfolding crises at SVB (Silicon Valley Bank) and First Republic, have little in common with the financial crisis in 2008 – nonetheless – March has been a spooked market across the board.
The result of such volatility created something of a flight to safety, waiting for more shockwaves as balance sheets get interrogated – the spotlight waiting for the next corporate position perceived as vulnerable to further interest rate rises or deposit redemptions. Thankfully, none of any influence have emerged – and Governments have gone to pains to make statements of reassurance.
Gold was pushed to its highest since 8 March (Ukraine conflict unfolding), on 20 March trading at US$2009/oz and has since given back some of those loftier gains at US$1,977/oz as the corporate news returned to calmer conditions, at least for now.
WHICH WAY TO TURN – CENTRAL BANK RATE CHANGES
On 16 March, the ECB raised interest rates by the predicted 50 bps alongside ‘dovish’ commentary – so the market expects fewer rises to come. The Fed continues to tread a fine line between managing inflation but leaving the door open to further tightening of the fiscal policy lest it puts unwarranted pressure on borrowing costs. In the press conference, Jerome Powell, Federal Reserve Chairman, said: It’s really … a question of not knowing at this point, how significant will this credit tightening be, and how sustainable? … This is 12 days ago, with reference to the stricken US banks.
The Bank of England announced its expected 25bps rise on 23 March with commentary that it still expected inflation to curb – despite the recent unexpected spurt. As a result, Sterling firmed against the dollar and the Euro. Market commentators are expecting a 50-50 chance of another 25bps – as early as May. It remains to be seen, and perhaps while we pause for breath, the key economies tread a fine line between fiscal and monetary policies.
DRILLING DOWN ON A COMMODITY – LITHIUM
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SPOT PRICE FOR MARCH
(as at close)
KEY ECON CALENDAR FOR APRIL
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