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Market Stability Hopes and UBS-Credit Suisse Fallout

Investors seek stability amidst market turmoil, banking sector concerns, and upcoming economic data from the US, Eurozone, and China.

Wall Street sign
Wall Street sign

This week, investors are looking for market stability following the turmoil caused by recent bank failures and the UBS-Credit Suisse merger. Upcoming US data could reveal the impact of market unrest on recession likelihood, while Eurozone inflation and Chinese PMI data will also be under the spotlight.

Banking Sector Turmoil Amid Rate Hikes and Bank Failures

Concerns are growing over potential surprises in the banking sector following the collapse of two US lenders, UBS's forced takeover of Credit Suisse, and a series of aggressive Federal Reserve rate hikes. Investors are now closely monitoring Deutsche Bank, whose shares have significantly declined in value.

Anticipating Q2 After a Tumultuous First Quarter

As the year's first quarter ends, investors are turning their attention to Q2 prospects. The beginning of the year saw a surge in equities. Still, recent events such as crypto company collapses, regional bank stock drops, and the Credit Suisse debacle have heightened market volatility.

US Economic Data and Fed's Next Move

This week's economic calendar features the core PCE price index, consumer confidence data, pending home sales, revised GDP, and initial jobless claims. Additionally, several Federal Reserve officials will be speaking, as markets now lean towards the possibility of no rate hike in the May policy meeting.

Euro and map
Euro and map

Eurozone Inflation and the Banking Crisis Impact

Inflation data for the Eurozone will be released on Friday, with expectations of a slowing headline rate but accelerating underlying inflation. As the European Central Bank (ECB) recently raised interest rates, policymakers are now debating more cautious steps while monitoring the effects of the banking crisis on lending and the economy.

China PMIs and Tokyo Inflation Data

Market analysts will scrutinize China's PMI data on Friday to assess the strength of the recovery in the world's second-largest economy following the easing of pandemic restrictions. Meanwhile, Tokyo inflation data is expected to show that inflation exceeded the Bank of Japan's (BOJ) 2% target for the tenth consecutive month. Incoming BOJ Governor Kazuo Ueda is anticipated to unwind yield curve controls and negative interest rates during his term, following a decade of unprecedented stimulus by his predecessor.