Global stock markets eye volatile week as Credit Suisse, Fed stimulate

Currencies will give an early indication of investor sentiment, with trading in the Asia-Pacific region starting at around 5am Sydney time. Traders will watch how the Swiss franc reacts to a flurry of weekend activity, which saw rival UBS Group AG consider a takeover of Credit Suisse while the government weighs a stake in the bank. The Swiss currency has lost some of its haven appeal with the country’s banking sector being at the center of financial turmoil. The Japanese yen, which led the gains among the group of 10 currencies last week, will give a sense of flight to safety.

Swiss authorities are seeking to push through the acquisition of Credit Suisse by UBS, but with the former considering the $1 billion offer too low, raising the risk of some form of nationalisation. Meanwhile, California officials are working on breaking up the collapsed Silicon Valley bank. Multiple pressure points in the financial system are roiling global markets and leaving the Federal Reserve with a difficult choice between continuing its fight against inflation or taking a pause to prioritize financial stability.

Credit Suisse narrows path to lower UBS bid, government aid talks

Volatility skyrocketed last week as fears spread about the health of the global financial system amid the effects of the Fed’s annual campaign to fight inflation. Worries about potential contagion drove investors to haven assets and forced a radical rethink about how tight the Fed — and other central banks — would be able to tighten policy.

Front-end Treasury yields fell by more than 20 basis points each day as investors poured cash into US securities. US bank stocks fell heavily and technology stocks offered some relief.

At the end of trading last week, swaps markets indicated the Fed would opt to go ahead with a quarter-point interest rate hike at its meeting on Wednesday, although pricing suggested it was likely to lapse. tightening circle there. At the height of concerns of bank stress earlier in the week, traders cut their odds of a quarter-point hike to less than half, while some banks including Goldman Sachs and Barclays changed their rate calls and now expect a rate hike. Don’t expect.