The Friday Market Wrap - 16 March
- An eventful week following the news of Silicon Valley Bank and Signature Bank over the long weekends. The contagion effect seems to be contained for now with US Government stepping in to guarantee depositors access to their funds. However, recent events over the renowned Credit Suisse sets panic over the stability of the European financial system as sighted “material weaknesses” in its financial reporting controls. Share price in Credit Suisse dropped 24% after the news that its major backer, Saudi National Bank ruled out providing further support. Credit default swaps for Credit Suisse reached distressed levels, reaching near 1000bps
- US CPI came in at 6% YoY and 0.4% MoM for February, pretty much in line with market expectations. Food prices moderated while the cost of energy and fuel dropped sharply. Core inflation edged lower to 5.5% YoY as shelter costs increased. Monthly core CPI rose 0.5% over the month from 0.4%. Given the situation with US banks, interesting to see if a 50bps rate hike is on the table next week
- China's industrial production soared 2.4% YoY (including January and February), faster than a 1.3% rise in December. Manufacturing output rose from the momentum of the lift in covid zero policy, while activity slowed in mining and utilities. Rebounding from this momentum were also China retail sales, expanding 3.5% over January and February. This was the first growth in retail sales following three consecutive months of decline. Sales bounced for oil products, jewellery, clothing and furniture
- The Australian unemployment rate dropped to 3.5% from 3.7% in January, below expectations of 3.6%. Data still shows a strong labour market as the economy added 64,559 jobs over the month of February. The participation rate decreased to 66.6%