General Market Analysis 24/03/23

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Markets Consolidate After Fed Update

Global stock markets experienced a mixed day yesterday as investors evaluated the latest update from the Federal Reserve Bank. European markets largely closed in the red after hikes from both the Bank of England and the Swiss National Bank, however, US markets were more buoyant, the Nasdaq finishing the day up 1%, the S&P 0.3%, and the Dow up 0.23%. The dollar’s drop post-fed took a bit of a breather as it recovered some of its lost ground against the majors and US treasury yields found a temporary base.

Central Banks Hike Despite Market Turmoil

We saw three separate rate hikes yesterday from central banks despite the turmoil that markets have experienced in recent weeks due to some serious issues in the banking sector. All fell in line with expectations with the FOMC and MPC raising 25bps in the US and UK respectively and the SNB adding 50bps in Switzerland. All came with similar messages that the concern from inflation is still very real hence the moves, however, there is some expectation that the recent shocks to the market will do some of the jobs for the central banks. Investors will now increase their focus on the data from each jurisdiction over the coming months to see if the anticipated drops occur or if central banks will have to jump back on the tightening cycle.

The Trading Week is Not Over

Investors have had another busy week with a lot of fresh information to digest, however, there are still three big trading sessions ahead and markets are still poised for more volatility. Asian markets are set for a relatively quiet day with no real data releases due. However, there are PMI data releases due out across the European sector as well as in the US and although these numbers will have not been impacted by recent market events, they will still be closely monitored by traders as we move into the weekend and thinner liquidity conditions.