US and China are implementing opposite monetary policies
Federica Montella | Mar 28, 2023 12:44
Yesterday has been a negative day for the Nasdaq but the other two big US indexes have reported profits.
The S&P 500 finished at +0.16%, the Nasdaq ended the trading session at -0.47% and the Dow Jones closed at +0.60%.
The investors' sentiment is Fear, as indicated in the graph below:
Sentiment indicator - Fear & Greed Index
The market sentiment is 36, in “Fear” mode, the same as last week.
First Citizens Bank to buy SVB
Silicon Valley Bank collapsed after its emergency moves to handle a wave of withdrawal requests and a huge loss on its securities holdings.
That was the biggest banking failure in the US after the financial crisis of 2008.
Last Friday, the Treasury Secretary called an emergency meeting of the Financial Stability Oversight Council, to discuss the US banking system and they reassured the public with a clear statement: "the U.S. banking system remains sound and resilient".
On Monday, First Citizen Bank (in coordination with the FDIC, part of the Financial Stability Oversight Council) announced its willingness to buy e failed Silicon Valley Bank.
The news had a positive impact on the banking shares, in particular, the share price of First Citizen Bank jumped 44%.
US and China governments are on different paths
We all know that the Federal Reserve is implementing a historically restrictive monetary policy to bring down too high inflation.
At the same time, however, in China is happening exactly the opposite.
The Chinese government is trying to stimulate its economy after the prolonged lockdowns, by providing funds to businesses so they can grow and hire more people.
There is clearly a different policy approach between the major world economies.
What to watch today
At 3:00 GMT, the US consumer confidence index for March will be released.
It is forecasted to decline to 101.
Financial markets could be volatile.
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