LGT Navigator

Market sentiment remains fragile ahead of the Fed decision

Following the turbulence surrounding the banking sector in the US and the quick takeover of the major Swiss bank Credit Suisse by UBS, the previously tense situation on stock markets seems to have calmed down somewhat yesterday. The focus is now on the eagerly awaited monetary policy decision of the Federal Reserve. ECB President Lagarde meanwhile stressed that the banking sector in the euro area is resilient and has a strong capital and liquidity position. Despite the recovery on stock markets, investor confidence remains battered and the mood on the floor remains fragile. 

Alessandro Fezzi, LGT
Reading time
5 minutes
© Shutterstock

The "tranquilizer pill" of the leading central banks, which, under the leadership of the US Federal Reserve, have expanded their supply of liquidity to the international financial system, had an effect. As a result, the stock indices in New York at the beginning of the week made up most of their losses from Friday. The Dow Jones Industrial closed 1.2% higher at 32,244.58 points and the S&P 500 closed 0.89% firmer at 3,951.57 points. On the Nasdaq, the indices gained about 0.35%. The battered confidence in the banking sector should thus be somewhat strengthened in the short term, but the rapid emergency takeover of Credit Suisse by UBS showed how quickly a major bank can be pushed to the abyss. On the bond market, the yield on ten-year US government securities rose again to just under 3.5%. 

Asia-Pacific markets rose on Tuesday, following positive guidance from Wall Street. Markets in Japan remained closed for a holiday. In South Korea, the Kospi rose 0.4% and in Hong Kong, the Hang Seng Index gained 0.9%. In mainland China, the Shanghai Composite rose 0.5% and the Shenzhen Component gained 1.4%. 

Christine Lagarde, Europe's top monetary watchdog, expressed confidence that eurozone banks are resilient to the recent turmoil and have sufficient resilience as well as strong capital and liquidity positions. In any case, the ECB's monetary policy toolkit is fully equipped to provide liquidity support to the euro area financial system, Lagarde said. Regarding the dual challenge of fighting inflation and a potential banking crisis, the ECB president said there was no trade-off between price stability and financial stability. The European Union's banking regulator also reiterated the stability and resilience of banks in Europe. 

Corporate news in focus: RWE and Kingfisher with annual figures and in the US Nike with Q3 earnings. 

Economic data in focus: Switzerland trade balance for February (08:00 CET), KOF spring economic outlook (09:00), ZEW economic expectations for Germany and the euro zone and from the US existing home sales in February.

LGT helps you make informed investment decisions

All about global economic and market trends at a glance

You can also follow us on Facebook or LinkedIn – or visit Insights and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi,
Source: LGT Bank (Switzerland) Ltd.

Contact us