Banks Get Boost from US and Europe, Oil Climbs Higher on OPEC Talks

Happy Friday, stock market enthusiasts! Let’s talk about the good news that’s been driving European stock markets up today. There are positive moves in the US and Europe to support struggling banks, which could prevent a full-blown banking crisis. As a result, market sentiment has been boosted and we’re expecting a higher opening for European stock markets today. Increased risk appetite have further bolstered the markets, and it remains to be seen what steps the Federal Reserve will take next week to support the economy.

Banks Get Support from Large US Banks and Swiss National Bank

The DAX futures contract in Germany traded 0.4% higher, CAC 40 futures in France climbed 0.1% and the FTSE 100 futures contract in the U.K. rose 0.8%. Several large U.S. banks have injected $30 billion in deposits into First Republic Bank, a move to support the lender which had been caught up in the backwash triggered by the failure of two other regional U.S. lenders last week. In addition, troubled European bank Credit Suisse has received a financial lifeline from the Swiss National Bank, strengthening its liquidity as it has struggled with substantial customer outflows after a string of scandals in recent years.

European Central Bank Raises Interest Rates, Confident in Banking Sector

The European Central Bank raised interest rates by 50 basis points on Thursday, suggesting the policymakers remain confident that the region’s banking sector will be able to cope with more monetary tightening even in these troubled times. Final CPI data for the Eurozone are due later in the session and is expected to show that inflation grew 0.8% on the month in February, up 8.5% on the year.

Oil Prices Climb Higher on Hope of OPEC Action

Oil prices climbed higher Friday on hope of a response from OPEC and its allies to the week’s sharp selloff on concerns the banking crisis would hurt global economic activity. Reports indicated that energy ministers from Saudi Arabia and Russia met in Riyadh on Thursday to discuss potential action to support the crude market, which is on course for its biggest weekly loss this year. The advisory committee of the Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, will meet on April 3.

Asian Currencies Rise Amidst Easing Global Banking Crisis Fears

Amidst easing fears of a global banking crisis, Asian currencies rose sharply on Friday while the dollar retreated as markets bet that the Federal Reserve will soften its hawkish stance to prevent further economic pain. Here are some highlights from the region:

China’s Yuan Boosted by Positive Economic Outlook

China’s yuan was among the best performers of the day, rising almost 0.5% due to a positive outlook on the Chinese economy from Goldman Sachs. The investment bank predicts that China’s economy will grow 6% this year, surpassing government forecasts of 5%.

Japanese Yen Benefits from Safe Haven Demand

The Japanese yen rose by 0.6% and was set to add 1.4% for the week. This comes as a result of the yen benefiting from increased safe-haven demand, coupled with a mild improvement in Japan’s massive trade deficit, easing supply chain issues.

Broader Asian currencies advanced as risk appetite increased, with fears of an imminent banking collapse eased by major U.S. lenders supporting First Republic Bank. This follows Swiss lender Credit Suisse Group AG scoring up to a $54 billion credit facility from the Swiss National Bank to fortify liquidity levels.

The support for banks, along with government reassurances that the banking sector is stable, has helped ease concerns over an imminent collapse in the banking system. This follows the failure of several U.S. banks over the past week.

Dollar Retreats on Bets that Fed Will Soften Its Hawkish Stance

The dollar index and dollar index futures retreated by about 0.3% each, as markets bet that the Federal Reserve will taper its hawkish stance to prevent further pressure on the economy from rising interest rates. Markets are now pricing in a nearly 90% chance that the Fed will hike rates by a smaller 25 basis points next week.