Welcome to this week's market update. In this blog post, we'll cover some of the most important events and trends to watch in the upcoming days. From the SVB news, Saudi Aramco's new deal with China and Gold price rise. Let's dive in and see what's in store for the week ahead.
Brief summary of what happened last week:
The U.S. stocks ended the week on a high note, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all recording weekly gains, despite renewed concerns over the banking system.
The Deutsche Bank, Germany's largest lender, experienced a drop after the cost of insuring the bank against a credit default soared. The rise in the cost of Deutsche Bank's credit-default swaps was the highest since late 2018, raising concerns about the strength of European banks.
Concerns about the banking sector's fragility have percolated following a year of the Federal Reserve's aggressive interest rate hikes. However, the outperformance of mega-cap technology stocks and other sectors has helped prop up the broader U.S. equities market. This month, the S&P 500 index is up less than 0.1%.
The role of regional banks in the U.S. economy is massive, with their failure potentially leading to slower economic growth and even a recession.
Wealth management firm Aspiriant's Chief Client Officer, Sandi Bragar, emphasized the importance of being diversified and defensive during these turbulent times. Holding high-quality companies that should be resilient during poor economic times, including healthcare, information technology, and consumer staples, is a wise strategy, according to Bragar.
Oil and Gold News:
And now, let's dive into the latest news and updates about the commodities markets.
Oil prices rose on Monday as investors assessed the impact of measures to rein in concerns about the global banking system, even as tensions in Europe were ratcheted up by Russian President Vladimir Putin's plans to place tactical nuclear weapons in Belarus.
Gold prices fell for a second straight session on Monday as the U.S. dollar firmed, while investors weighed measures taken by authorities to assuage fears of a crisis in the global banking sector. Spot gold was down 0.5% at $1,967.86 per ounce as of 0632 GMT.
The dollar index rose 0.2%, making bullion less affordable for overseas buyers. Recent stress in the banking sector and the possibility of a follow-on credit crunch bring the United States closer to a recession, Minneapolis U.S. Federal Reserve President Neel Kashkari said.
As we move forward into the coming week, it's time to turn our attention to the most significant events on the horizon.
Market-Moving Events | Week 13:
This week, investors are hoping for a return of stability to markets rattled by bank failures while keeping an eye on the ongoing fallout from the UBS-Credit Suisse merger. In the United States, upcoming data will show how much the market turmoil impacts the likelihood of a recession.
Eurozone inflation data and PMI data out of China will also be in focus.
Many investors are worried that more nasty surprises may lurk in the banking sector following the collapse of two U.S. lenders and last weekend's forced takeover of Credit Suisse by UBS. With the ripple effects of aggressive rate hikes by the Federal Reserve over the past year, German giant Deutsche Bank has been in the spotlight, with its shares losing more than a quarter of their value this month.
In terms of U.S. data this week, there will be a focus on the core PCE price index, which is the Fed's favored measure of inflation, and on consumer confidence data for March. Other reports include data on pending home sales, revised GDP, and initial jobless claims. Several Fed officials are also due to speak during the week.
In the Eurozone, the closely watched inflation data is expected to show a slowdown in headline inflation, while the underlying rate of inflation, which strips out volatile elements, including food and fuel prices, is expected to accelerate. The banking crisis has prompted fears that lending will slow, acting as a drag on the economy.
Chinese PMI data on Friday will be a key focus for investors as they try to gauge the strength of the recovery in the world's second-largest economy following the lifting of pandemic restrictions. In Japan, Tokyo inflation data on Friday will be in the spotlight and is expected to show that inflation has topped the Bank of Japan's 2% target for the tenth straight month.
▫️Monday, March 27 - Dallas Fed Manufacturing Index (March)
▫️The upcoming Tuesday, March 28, is anticipated to be a day full of significant events, including the release of several crucial economic indicators such as the Retail Inventories (February), Wholesale Inventories (February), C.B. Consumer Confidence Index (March), and Richmond Fed Manufacturing Index (March)
▫️Pending home sales (February) will be released on Wednesday, March 29
▫️Thursday, March 30 - Initial jobless claims and Fourth quarter GDP, third estimate
▫️ On Friday, March 31, we can expect the release of several important economic indicators, including Personal Income and Spending for February, the Personal Consumption Expenditures (PCE) Price Index for February, the final reading of the Michigan Consumer Sentiment Index (MCSI) for March, and the Chicago Purchasing Managers' Index (PMI) for March. These indicators can provide valuable insights into the state of the U.S. economy, particularly regarding consumer spending, inflation, and manufacturing activity.
Let's shift our focus to the top three stocks that are creating a buzz in the market and garnering attention from investors.
Trending Stocks:
Chipmaker Nvidia's (NVDA) stock price experienced a dip of -1.52% on Friday. Nvidia is a key player in the data center and gaming industry and is currently exploring opportunities in the field of artificial intelligence (AI) chips. The CEO of Nvidia, Jensen Huang, highlighted the importance of AI in a recent presentation and announced various initiatives to broaden the company's reach in this field. After a beat-and-raise report on February 22, driven by its data center segment, Nvidia is now one of the top stocks investors are keeping a close eye on.
Tesla (TSLA), the electric vehicle carmaker, experienced a drop in stock price of -0.94% on Friday. The company strives to dominate the automotive industry in the coming years. It has recently declared a price war on its rivals in China and the United States, the world's two largest auto markets. In response, Tesla's competitors have lowered the prices of their cars, sometimes at the risk of undermining their profit margins. Despite the increasing competition, Tesla is aggressively increasing its production and aims to produce 20 million cars annually by 2030.
On the other hand, First Republic Bank (FRC) experienced its third consecutive day of decline on Friday with a -1.36% drop in stock price. The bank's shares have been hit hard following the failures of two large US regional banks, Silicon Valley Bank and Signature Bank, and the subsequent global bank panic that has ensued. Despite repeated efforts to rescue the San Francisco lender, First Republic shares are trading just above their all-time low set on March 20. Investors remain unsettled about the firm's prospects and many other midsize US lenders.
And to wrap things up, let's dive into our final topic.
Other important events this week:
Saudi Aramco, the world's top oil exporter, has signed an agreement with Chinese partners to invest in a major oil refinery and petrochemical project in northeast China.
The project in Liaoning province's city of Panjin is expected to start in 2026 and aims to meet China's growing demand for fuel and chemicals. The Huajin Aramco Petrochemical Company joint venture will build and operate the complex, which will house a 300,000 barrels per day oil refinery and a cracker that will produce 1.65 million tonnes of ethylene and 2 million tonnes of paraxylene per year.
This is Aramco's second major refining-petrochemical investment in China after signing two other agreements for refinery-petrochemical investments before the pandemic. The project is expected to cost around $12.2 billion.
In other news, Asian shares were mixed on Monday after stocks on Wall Street shook off a weak start to end higher last week, despite persisting worries over banks on both sides of the Atlantic. The Federal Deposit Insurance Corp. agreed to the sale of the troubled Silicon Valley Bank to North Carolina-based First-Citizens Bank & Trust Co, which could raise confidence in the troubled banking industry after failures at Silicon Valley Bank and two other banks rattled investors. However, concerns persist that higher interest rates squeezing lenders could increase the likelihood of a recession. Deutsche Bank's stock tumbled 8.5% in Germany on Friday, and shares of other major European banks suffered smaller declines.
The managing director of the International Monetary Fund, Kristalina Georgieva, told a Beijing conference on Sunday that financial stability risks have risen as interest rates are raised to fight inflation, underscoring the need for vigilance.
Thanks for reading! We hope you found this blog post helpful in your quest for informed investment decisions. Remember to monitor a stock's fundamentals, financial health, industry trends, and any relevant information or events that may impact the stock price.
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