Markets Mixed as Europe's Banking Industry Wobbles

  • Market Overview

The local bourse tracked a slump in European markets as shares of one of the world's leading financial service providers, Deutsche Bank (ETR: DBKGn ), sank on Friday, adding on concerns about the overall health of the global banking system and the outlook for interest rates. Following a jump in credit default swaps, Deutsche Bank's shares plunged by more than 14% on Friday. “This comes just days after the emergency rescue of Credit Suisse (SIX: CSGN ) and the collapse of Silicon Valley Bank (NASDAQ: SIVB ) as well as several measures from authorities stateside to avoid contagion across the financial sector,” Reuters added. However, French President Emmanuel Macron reassured investors that the banking system remains sturdy, while European Central Bank President Christine Lagarde said, “the Eurozone is resilient because it has strong capital and solid liquidity positions, and that the Eurozone banking sector was robust and that the central bank's toolbox was ready to supply liquidity to the financial system if required.” Despite the session’s losses, the FTSE/JSE All Share Index (ALSI) gained 3%, supported by solid gains in resources, while the rand broke a two-day winning streak, reaching an intraday worst level of R18.28/$ at 19h00 on Friday.

Wall Street closed higher on Friday despite concerns about the global banking sector. For the week, tech-heavy Nasdaq rose 2.10%, while the Dow Jones and S&P500 edged up to 0.10% and 1%, respectively.

The Hang Seng fell 0.67% to 19 915.68 points on Friday, amid concerns about the impact of the recent banking crisis, with Hong Kong's central bank warning that the city should be on the lookout for any further contagion risks from US regional banks. Moreover, tensions between Washington and China have resurfaced after US legislators accused TikTok of causing emotional anguish to teenage users on Thursday. Markets continued to digest most central banks' hawkish views. The Nikkei declined as investors responded to data indicating Japan's annual inflation rate decreased substantially from 41-year highs, suggesting softening global inflationary pressures.

PSG Wealth Daily Investment Update, 27 March 2023

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