Global equities have continued to pull back from highs and are on track to post a second consecutive monthly decline in March. With major central banks set to push interest rates higher for longer, it is becoming more and more likely that economies will slow substantially as the year progresses.
US market sentiment soured following news that SVB had collapsed, forcing US regulators to seize its assets and stop a depositor run on the California-based bank. Two days after SVB’s collapse, New York-based Signature Bank also went under, again forcing regulators to seize assets. Considering the SVB and Signature Bank collapses represent the second and third largest bank failures in US history, respectively, one can understand why many have been worried over contagion fears.
The Chinese recovery continues to pick up steam, with China announcing that they are fully opening their borders to tourists after three years of restrictions. The reopening has undoubtedly fuelled a recovery in consumption, which is beginning to show up in economic data. The Caixin Manufacturing PMI jumped up to 51.6 in February and points to the first increase in factory activity since July last year. Services also remain robust, with the Caixin Services PMI advancing to 55.
The latest bank to run into trouble is none other than Switzerland’s Credit Suisse. The global investment bank has made countless headlines over the years due to mismanagement, reputational damage, and large losses in 2022. The Swiss bank can’t seem to catch a break after it lost close to a quarter of its value on Wednesday following Saudi National Bank’s statement that it would not provide any more financial assistance to it.
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