7/11/2023 0 Comments Market watch asiaOn Wednesday, the Fed raised its key overnight rate to a range of 5% to 5.25% from close to zero early last year. Investors worry depositors might pull money out of lenders that are thought to be troubled, worsening their financial pressures. Rate hikes by the Fed and other central banks in Europe and Asia have put pressure on banks by causing the market prices of bonds on their books to decline. “Any inaction over the weekend could translate to a more downbeat risk environment to start next week.” Investors want to know steps authorities might take to “limit further contagion risks,” Yeap Jun Rong of IG said in a report. ![]() The Dow dropped 0.9% and the Nasdaq fell 0.5%. ![]() On Thursday, the S&P 500 index lost 0.7% as investors worried about the health of banks following three high-profile failures in the United States and one in Switzerland. The Fed indicated Wednesday it might be finished with rate hikes for now, but the president of the European Central Bank, Christine Lagarde, on Thursday said, “we are not pausing.” The ECB announced another rate hike but by a smaller margin of one-quarter percentage point. workers filing for unemployment last week accelerated a bit more than expected. They expect the Fed to start cutting rates in the second half of the year to prop up economic growth, though chair Jerome Powell said this week he doesn’t see cuts coming so early.Ī report Thursday showed the number of U.S. “We estimate a slowdown in net job growth and tick up in the unemployment rate,” said Rubeela Farooqi of High Frequency Economics in a report. The red-hot jobs market is one of the reasons that the fed has ratcheted up interest rates in a bid to cool the economy and inflation. government will report April employment numbers that are expected to show a slowdown in job growth. Regulators seized First Republic and sold most of it to JPMorgan Chase and shares of financial institutions slid despite assurances from government and industry officials that the banking system is sound. Los Angeles-based PacWest Bancorp said it's selling assets and has been approached by potential partners and investors. ![]() Still, the S&P MidCap 400 Banks Index is down 14% for the week after the collapse of First Republic Bank on Monday. The financial sector is the strongest component on the S&P 500 in early trading.
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