Market Update

Equity markets experienced another roller-coaster week.
The week began on shaky ground due to apprehensions about the UBS acquisition of Credit Suisse. However, markets rebounded in anticipation of the Fed's decision regarding US interest rates, only to face headwinds again following remarks from Janet Yellen, the US Treasury Secretary.
The Fed's monetary policy gathering on 22 March 2023 concluded as many anticipated, with a 0.25% hike in US interest rates. A silver lining emerged when the Fed Chair, Jay Powell, disclosed that the policymakers had contemplated delaying the rate hikes due to the uncertainties plaguing the banking sector. He acknowledged these uncertainties might naturally restrict monetary conditions, suggesting that rapid interest rate hikes might not be required to curb inflation. This aligns with our previous sentiments that the Fed might be poised to reduce interest rates sooner than later.
However, Janet Yellen, after bolstering confidence in US banks by ensuring deposits at Silicon Valley Bank, appeared to take a step back. She expressed reservations about implementing a universal deposit guarantee for other banks. Given the market's tendency to react first and ponder later, this led to equity markets retracting some of their gains for the week.
Regrettably, this suggests that concerns over the banking industry may persist for the near future, likely keeping market volatility on the higher side.
On the UK front, BoE officials voted 7-2 in favor of raising UK interest rates by 0.25%, settling at 4.25%. Though retail sales saw a 1.2% uptick in February, the GfK Consumer Confidence indicator for March remained in the negative territory, reflecting the ongoing pressure on household incomes.