Governments and central banks across major economies are scrambling to limit the knock-on effects from the rapid collapse of Silicon Valley Bank (SVB), a key financier of the tech and startup ecosystem around the world.
The ongoing saga surrounding SVB now hangs over market proceedings, in a week which should’ve been dominated by chatter surrounding the incoming US inflation data:
Tuesday, March 14
Wednesday, March 15
Thursday, March 16
Friday, March 17
Remember, markets are currently operating in a “bad news is good news” mode.
Hence, with policymakers stepping in to limit the damage of SVB’s collapse (as well as that of Silvergate, Signature Bank, and perhaps more to come), that is prompting markets to believe that the Fed has to pivot into supportive mode and ease up on its rate hikes.
At the time of writing, the Fed funds futures are only pricing in a 25-basis point hike by the Fed at its upcoming decision due March 22nd.
Such expectations are significantly diluted from the 70% chance accorded last week for the larger 50-bps Fed rate hike at its March meeting.
Hence, no surprise that the NQ100_m (which is based of the benchmark Nasdaq 100 index) has bounced off its 200-day simple moving average (SMA) to surge higher.
Further signs this week that policymakers, especially the Fed, is struggling to limit the SVB fallout may in turn boost risk assets, including the NQ100_m.
However, amid the SVB saga, market focus will still be on the incoming US CPI data due Tuesday.
A higher-than-expected US inflation figure may revive bets for an aggressive Fed, provided such expectations can punch through the lingering fears over the extent of any SVB contagion.
The tech-heavy index has indeed climbed 20.3% since the closing price on 28th December 2022, which was then a two-year low, meeting the criteria of a 20% climb from a recent low to mark a “bull market”.
30 March 11:27
Should markets increasingly expect an actual Fed rate cut in Q3 2023, or even an official pause on the Fed rate-hiking cycle at its next policy meeting in May (52% chance of such an occurrence), that should help the Nasdaq 100 officially lay claim to a bull market.
23 March 12:10
However, this latest iteration is likely to succumb to fundamental drivers over the course of this month that are set to have a greater influence rather than technical signs.
9 March 11:56
At the time of writing, the futures contracts for the S&P 500 are extending February’s declines into this month. At the time of writing, the benchmark index for US stock markets has gone below the widely-watched 100-day and 200-day simple moving averages (SMA), having earlier already broken below the uptrend line from October’s trough.
2 March 11:05
There's a better website for you
A new exciting website with services that better suit your location has recently launched!
Sign up here to collect your 30% Welcome Bonus.