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Markets gain as investors see bank crisis calming

Banking stocks continued to rally mid-week as worries about stability within the financial sector diminished further. The US benchmark KBW Bank Index finished the day up 2.09% on Wednesday. UBS – which agreed to a regulator-backed takeover of rival Credit Suisse – ended the day with a gain of 3.72%. The stock was supported by news that former Chief Executive Sergio Ermotti will rejoin the bank, replacing current CEO Ralph Hamers.

Alessandro Fezzi, LGT
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5 minutes
UBS and Credit Suisse
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Equity markets in New York were boosted by Micron Technology’s earnings outlook on Wednesday. The US chipmaker’s outlook beat expectations and signalled that the rough times for the industry may be over as customers have largely reduced inventories, a positive sign for industry earnings going forward. The stock ended the day with a gain of more than 7% and pulled the Nasdaq 100 up along with it. The tech-heavy benchmark finished the day up 1.87% at 12’846.03 and has now rallied more than 20% since late December. An increase of more than 20% is considered by many market participants to be the beginning of a bull market. The broader Dow Jones Industrial jumped 1% as well, closing at 32’717.60 points while the S&P 500 gained 1.42% to close at 4027.81 points.

Markets in Asia were trading more mixed on Thursday as traders were cautious ahead of a flurry of economic data including Friday’s release of the Federal Reserve’s preferred measure of inflation, the PCE deflator. Investors are hoping the PCE data will give markets a feeling for whether the US central bank has come to the end of its rate hiking cycle. Hong Kong’s Hang Seng Index fell slightly along with the Hang Seng Tech Index. In mainland China, the Shanghai Composite lost 0.5% and the Shenzhen Component was trading down 0.4%. Japan’s Nikkei was down 0.7%, while South Korea’s Kospi was up 0.2%. Australia’s S&P/ASX 200 gained 0.9% with mining stocks and banks leading the way.

Even as markets were still struggling to make a noticeable recovery after the recent financial sector turmoil, the European Central Bank’s chief economist, Philip Lane, said that more interest rate hikes would be appropriate once sentiment calmed down. He added that even if volatility in the financial sector drags on but remains limited, there will be need for further increases to interest rates. The ECB forged on with another 50-basis-point interest rate hike earlier this month, despite widespread concerns about banking sector stability.

Corporate news in focus: Alcon Capital Markets Day.

Economic data in focus: Switzerland’s KOF Economic Barometer for March (09:00 CET), German Consumer Price Index for March (14:00 CET), US Q4 gross domestic product (14:30 CET), US initial jobless claims (14:30 CET).

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

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