Fed lends, China eases - Market story March 17

Banks rush to the safety of Fed liquidity as concerns about the banking sector in the United States and Europe continue to bubble. China loosened monetary policy to promote a less effective post-COVID recovery. 

Stocks are holding on to Thursday's gains, but First Republic is falling. The Michigan Consumer Sentiment Index ends an important week for economic data. Here's what you need to know in the financial markets on Friday, March 17.

1. Banks look to the Fed

US banks flocked to the Federal Reserve's liquidity facility last week more than ever. The central bank's weekly balance sheet shows $153 billion in loans through the discount window - more than at any time during the 2008 crisis - while the Fed's new reserve base Bank Term Financing Program (BTFP), lending an additional $12 billion. Analysts expect BTFP to take a larger share of loans in the coming weeks due to more favorable terms.

Shares of First Republic (NYSE:FRC) fell 5.6%, ending much of Thursday's rally.

While shares of PacWest (NASDAQ:PACW) fell 2.6%. Other mid-sized banks performed slightly better, while tier 1 bank stocks like JPMorgan (NYSE:JPM) fell slightly.

2. China loosens monetary policy

At a time when major central banks in the West are still in tightening mode, the People's Bank of China has eased a key tool of its monetary policy, cutting its reserve ratio by 25 basis points. required reserve for large banks. It is currently at 7.6% by volume, the lowest level since 2007.

The move is intended to ensure that the country hits its 5% growth target this year and supports "weak links" in the economy (although it doesn't specify the real estate sector by name). It comes at a weekend where industrial production and trade data disappoint.

Elsewhere, the Kremlin confirmed that President Xi Jinping will visit Moscow next week, in a move that sheds light on China's willingness to support a Russian war in Ukraine that has been a factor. massive weakening of Western demand for Chinese factory goods.

3. Stocks set to open mix

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By 06:45 ET (10:45 GMT), Dow Jones futures were down 91 points or 0.3%, while S&P 500 futures were down 0.1% and Nasdaq 100 futures were essentially down. is unchanged. All three indices tend to end the week in the green.

Stocks likely to watch out for the future include FedEx (NYSE:FDX), which jumped more than 11% after strong earnings and outlook for the year despite a slowdown in logistics business expectations.

The Michigan Consumer Sentiment Index at 10:00 ET (14:00 GMT) closes an important week for economic data..

4. Credit Suisse collapses after merger rejection

Shares of Credit Suisse (SIX:CSGN) fell more than 8.5% in Zurich after Bloomberg reported that the bank rejected a suggestion by Swiss regulators that its much larger rival UBS would take over it. UBS is also reportedly opposed to the deal, according to newswire.

Switzerland is under pressure to find a solution to a crisis that is damaging its reputation as a financial center, which has bet heavily on imposing the country's tightest capital and liquidity requirements. all major jurisdictions after the previous financial crisis. A merger with UBS would violate a longstanding tenet that merging those two banks would create an unacceptable concentration risk in the Swiss banking sector.

Meanwhile, shares of UBS (NYSE:UBS) were also affected by the news, falling more than 3.0% in pre-opening New York trading.

5. Oil prices struggle amid economic worries

Crude oil prices struggled to make any gains over the weekend, where financial stability concerns forced market participants to take a more cautious view on the possibility of growth. demand this year. That's despite the agency's official forecasts largely in light of recent banking volatility.

Before 06:55 ET, US crude was up 0.8% at $68.92 a barrel, while Brent Crude was up 0.6% at $75.11 a barrel. The Baker Hughes rig count may attract more attention than usual after the US government predicted that shale oil production would likely peak in the spring.

Meanwhile, the CFTC positioning data is likely to reflect the liquidation of speculative long positions over the past week.

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