GLOBAL CAPITAL MARKETS OVERVIEW, ANALYSIS & FORECASTS:

Author: Dr. Alexander APOSTOLOV (researcher at Economic Research Institute at BAS)

European stocks tumbled to two-month lows on Monday after U.S. lender Silicon Valley Bank collapsed, sending European banks to their worst day in over a year. The Pangea Stoxx 600 index fell 2.3%, and the Stoxx banks index fell more than 5% after HSBC bought SVB's UK arm in a government-driven private sale to protect depositors. Germany's DAX fell 3% to below 14960, its lowest level since Jan. 19, with Commerzbank (-10%) leading the gains. Meanwhile, investors continued to focus on the latest efforts by the U.S. government to bolster confidence in the banking system and reduce the risk of contagion from bank failures by announcing it would protect "all depositors" at SVB and establish a new lending program. Investors should turn to Tuesday's US inflation data, Wednesday's new UK budget, and Thursday's European Central Bank meeting. On Monday, the CAC 40 plunged about 2.9 percent to close at a more than seven-week low of 7,012, its fifth straight session of losses and in line with regional peers. Investors continued to assess the risk of a sudden collapse of SVB despite intervention by U.S. authorities to support the banking system. Traders cautiously await tomorrow's highly anticipated U.S. inflation data amid growing speculation that the Federal Reserve will pause interest rate hikes. Locally, President Emmanuel Macron's unpopular pension reform plan was passed by the French Senate on Saturday night, sparking another wave of protests in France. On the corporate front, all index constituents closed in the red, led by financials, including BNP Paribas (-6.8%), Société Générale (-6.2%), Axa (-5.9%) and Crédit Agricole (- 3.1%). In addition, Alstom (-6.2), ArcelorMittal (-5.3%), and TotalEnergies (-5%) also fell sharply. The FTSE MIB fell 4% to close at 26,183 on Monday, its worst session since June 2022, as Milan financials underperformed their European peers due to their heavy weight in the benchmark stock index. Banks and insurers led losses on fears of contagion after the collapse of SVB in the U.S. led to the failure and sell-off of several other U.S. banks. At the same time, volatility in Italian bonds has prompted Italian heavyweights to book more positions in debt securities in held-to-maturity due to high levels of Italian debt, exposing Italian lenders to greater risk. BPER Banca, UniCredit, and Banco BPM were the biggest intraday losers, plunging 9.5%-8% intraday, while other banks fell sharply. Meanwhile, investors cautiously await a new U.S. CPI inflation report due Tuesday and the European Central Bank meeting later this week. The IBEX 35 plunged to 9240 on Friday, following its European counterparts, dragged down by financial losses amid signs of stress in the US banking sector after tech lender SVB Financial announced a capital raise to shore up its balance sheet due to the decline in its customers' deposits. Rate hike fears also persisted, given today's crucial US jobs. On the corporate front, Banco Santander was the laggard (-5.03%), followed by Banco Sabadell (-4.26%) and Bankinter (-4.34%). Among the few protagonists were Iberdrola and Endesa. The latter announced the planned sale of its renewables division to be a hydrogen manager. Meanwhile, Iberdrola's U.S. subsidiary Avangrid and PNM Resources filed a joint petition with the New Mexico Public Regulatory Commission to drop the appeal against their merger.

London stocks fell for a third straight session on Monday, dragged down by the energy and financial sectors, with the benchmark FTSE 100 down nearly 3% to close at a more than two-month low of 7,550. Risk appetite in Europe remains subdued in light of the recent turmoil in the U.S. banking sector, despite steps by authorities to stem the fallout from Silicon Valley bank failures. Investors also digested reports of HSBC buying the UK arm of SVB in a private sale brokered by the government to protect depositors. Among individual stocks, HSBC, Mid-tier Capital Group, Barclays, and Standard Chartered were the biggest losers, falling between 3.5% and 6.7%. Oil giant BP also came under intense selling pressure, falling more than 4%.

The ruble-based MOEX Russia index erased earlier gains to close 0.3% lower at 2,270 on Monday, paring last week's gains under pressure from energy producers and banks. At the same time, investors focused on blue-chip companies—Dividend announcements. The financial sector was under the most pressure, with Moscow Exchange shares falling nearly 3 percent as investors continued to assess a disappointing dividend figure recommended by its board. Sberbank also closed in the red as investors further digested its year-end 2022 results to see how the bank would turn around its business following last year's sanctions. On the other hand, a handful of banks closed in the green, underscoring the isolation of Russia's financial markets from those in the West, as companies appeared unaffected by the U.S. bank collapse. Meanwhile, soaring gold prices supported Polymetal and Polus up 5.9 percent and 4 percent, respectively.

Wall Street turned an initial sell-off into a rebound Monday morning, with the Dow up nearly 200 points, the S&P 500 and Nasdaq 100 up 0.5 percent and 1.5 percent, respectively, amid growing speculation that financial turmoil could force The Fed to pause its tightening cycle. Big Tech and other growth stocks gained traction, while the bank relief proved short-lived. The collapse of Silicon Valley Bank and New York-based Signature Bank has raised concerns about the risks to other banks from the Fed's biggest cycle of rate hikes since the early 1980s. However, it also sparked fresh speculation about a policy shift. Goldman Sachs was among the first to say it no longer expects the Fed to raise rates at its March 22 meeting. Investor concerns over possible contagion effects in the wider banking sector also eased after U.S. regulators announced a series of emergency measures to provide liquidity.

The Canada S&P/TSX composite index fell nearly 2% on Monday, hovering below 19,500, tracking Wall Street's plunge amid concerns about the stability of the U.S. financial sector following the collapse of Silicon Valley banks. Toronto-traded banks plunged more than 3 percent on average, with BMO and TD Bank down 4.7 percent and 3.5 percent, respectively. In addition, domestic banking regulators temporarily took control of SVB's Canadian branch. Energy producers also recorded heavy losses as ensuing recession fears weighed on crude prices. As a result, oil and gas producers fell an average of 4%. On the other hand, higher precious metal prices supported a nearly 2% rise in Canadian gold miners. 

Around noon on Monday, New Zealand stocks fell 102 points, or 0.87%, to close at 11,625 points, hovering at their lowest level in 2-1/2 months, while Wall Street stocks sold off sharply on Friday, the largest since the 2008 financial crisis in the United States—the aftermath of the collapse of the largest bank. U.S. banking regulators took control of Silicon Valley bank on Friday after failing to raise new capital. Meanwhile, Treasury Secretary Janet Yellen said on Sunday that the government would not bail out banks despite efforts to limit losses from the collapse. Domestically, food prices in New Zealand rose 12% year-on-year in February, the highest level since September 1989, with groceries accounting for the biggest increase. However, nearly all sectors fell, dragged down by electronic technology, health care, energy mining, and financials. Comvita NPV fell 4.5%, followed by Gentrack Group (-3.9%), Chorus Ltd (-2.2%), Serko Ltd (-2.2%), and Skellerup Hlds. (-1.6%).

On Monday, the China Shanghai Composite Index rose 0.3% to close above 3,235 points, ending a five-day losing streak, with positive signs of policy continuity, with the current central bank governor, finance minister, and commerce minister staying on. The National People's Congress will also close with a press conference chaired by appointed Premier Li Qiang. Meanwhile, investors remained wary of further systemic risks after the Silicon Valley bank's collapse, even as U.S. regulators announced plans to support depositors and offer new lending programs to financial institutions. As a result, heavyweight companies such as China Telecom (5.3%), ZTE Corporation (4.6%), TBEA (8%), China Great Wall (9.1%), and PetroChina Capital (9.6%) rose significantly.

In early trading on Monday, the Hang Seng Index rose 174 points, or 0.9%, to 19,494, snapping losses in the previous four sessions. Gains in U.S. stock futures pushed the Hang Seng higher after U.S. regulators announced that all Silicon Valley Bank depositors would have access to their funds starting today. The Fed also said it was creating a new bank term funding program designed to protect deposits. On the mainland, China's central bank governor and finance minister unexpectedly stayed at the annual meeting amid looming economic challenges at home and abroad. Energy, technology, consumer, and financial stocks led to gains led by China Resources Beer. (4.2%), CNOOC (4%), Tencent Holdings. (2.8%), Haier Smart Home (2.4%), NetEase Co., Ltd. (2%), and China Mobile (1.7%). On Friday, Hong Kong stocks erased their 2023 gains and fell about 3%, near their lowest level in nearly 11 months, as the chip war between Washington and Beijing continued.
The India BSE Sensex fell 900 points to close at 58,240 on Monday, its third session of losses to its lowest level in five months, as the collapse of the U.S. Silicon Valley Bank hurt global financial stocks. Indus Ind Bank and Axis Bank fell 3.2% and 2%, respectively, while State Bank of India plunged 7.4% as RBI approved reappointments. However, the bank's chief executive's time was shorter than expected. Tech Mahindra shares, on the other hand, soared 7.1% after the company appointed a new CEO and inspired investor confidence. Meanwhile, traders awaited RPI data for February, due shortly after the close, which is expected to show retail inflation remains above the RBI's upper-bound target of 6% for the period. Higher inflationary pressures at the start of the year led money markets to price in a 25-basis point rate hike by the central bank in April.

 

REVIEWING THE LAST ECONOMIC DATA:

Reviewing the latest economic  news, the most critical data is:

- US: U.S. consumers’ inflation expectations for the year ahead fell sharply to 4.2% in February 2023, the lowest level since May 2021, from 5% in the previous two months. Consumers expect gasoline (-0.4 percentage points to 4.7%), food (-1.7 percentage points to 7.3%), health care (-0.3 percentage points to 9.4%), college education (-1.2 percentage points to 8.1%) and rent (-0.2 percentage points to 9.4%) prices will rise at a slower pace. On the other hand, median house price growth expectations rose 0.3 percentage points to 1.4%, three-year inflation expectations were unchanged at 2.7%, and five-year growth expectations rose 0.1 percentage points to 2.6%. At the same time, labor market expectations and households' perceptions and expectations of current and future financial conditions also improved.

- IT: Shares in Milan fell for a third straight session on Monday, with the FTSE MIB index falling more than 4% to a six-week low of 26,105, underperforming regional peers. Banks are under pressure despite U.S. authorities' decision to shore up the banking system following the collapse of Silicon Valley Bank late last week and Signature Bank this weekend. Bper Banca (-9.2%), Banco Bpm (-8.3%), Finecobank (-7.9%), and Intesa Sanpaolo (-7.4%) were the hardest hit. Meanwhile, investors cautiously await a new U.S. CPI inflation report due Tuesday and the European Central Bank meeting later this week.

- IT: Shares in Milan fell for a third straight session on Monday, with the FTSE MIB index falling more than 2% to a five-week low of 26,722, underperforming regional peers. Banks are under pressure despite U.S. authorities' decision to shore up the banking system following the collapse of Silicon Valley Bank late last week and Signature Bank this weekend. Bper Banca (-4.6%), Banco Bpm (-3.8%), and Intesa Sanpaolo (-3.5%) led a decline. However, Leonardo (+2.3%) continues to benefit from a positive result in 2022. Meanwhile, investors cautiously await a new U.S. CPI inflation report due Tuesday and the European Central Bank meeting later this week.

- JP: In the first quarter of 2023, the business survey index of Japan's large manufacturing companies fell to -10.5% from -3.6% in the previous quarter, as higher import costs and raw material prices squeezed corporate profit margins and global economic uncertainty Sex continues to weigh on business confidence. The latest figure is also the lowest reading since the second quarter of 2020. The business survey index measures the percentage of firms that expect business conditions to improve from the previous quarter minus the percentage that expects business conditions to worsen. Japan's large manufacturing companies expect business conditions to improve in the coming months, with an outlook of -0.7% in the second quarter and a further increase to 6% in the third quarter.

- NZ: In February 2023, food prices in New Zealand rose 12% year-on-year, the largest increase since September 1989, after rising 10.3% in January. Grocery foods were the biggest contributors (12%), namely barn- or cage-raised eggs, potato chips, and cheddar cheese. The second largest contributors were fruits and vegetables (23%), mainly tomatoes (117%) and potatoes (48%). Other big increases were seen in restaurant meals and ready-to-eat food prices (8.4 percent); meat, poultry, and fish (9.8 percent); and food prices, which rose 1.5 percent from the previous month.

- NZ: New Zealand's BusinessNZ Performance of Services Index rose to 55.8 in February 2023 from 54.7 in January, indicating the strongest growth in the services sector in four months. Activity/sales (53.6 vs. 52.1), new orders/business (57.1 vs. 54.8), inventories (58.3 vs. 54.7), and supplier deliveries (55.9 vs. 52.3) all increased. At the same time, the employment sub-index fell slightly (51.2 vs. 51.6). Meanwhile, negative reviews fell to 51.9 percent in February from 61.7 percent in January. The reasons varied among those who gave positive comments, with customers returning after the holidays and a general pick-up in tourism, including overseas visitors. However, NZ senior economist Craig Ebert said, "the strongly expanding PSI, and the recovering tone of the PMI, suggest that economic activity has grown relatively well in the early part of the year."

- NZ: Food prices in New Zealand rose 12% year-on-year in February 2023, the biggest increase since September 1989, following a 10.3% increase in January. Grocery store food was the largest contributor (12%), namely barn-raised or cage-raised eggs, French fries, and cheddar cheese. The second largest contributor came from fruit and vegetables (23%), mainly tomatoes (117%) and potatoes (48%). Other strong increases were also recorded for restaurant meals and ready-to-eat food prices (8.4%); meat, poultry, and fish (9.8%); and soft drinks (9.1%). Compared to the previous month, food prices increased by 1.5%.

- SR: The annual inflation rate in Serbia rose to 16.1% in February 2023, extending an all-time high of 15.8% from the previous month and well above expectations of 15.6%, despite the 475 basis points of interest rate increases for 12 consecutive months. As energy and rent inflation weighed on consumer costs, consumer prices co. Continued to accelerate for food and soft drinks (24.6.% vs. 23.7% in January) and housing and utilities (24% vs 23%). Conversely, price growth slowed down for transport (6.6% against 7.5%). As a result, every month, Serbian consumer prices increased by 1.4% in February.

- BH: Producer prices in Bosnia and Herzegovina increased by 16.2% year on year in January 2023, the lowest since March 2022, compared with a 17.6% increase in the previous month. Inflation slowed for intermediate goods (17.0 vs. 19.0% in December), non-durable consumer goods (17.0 vs. 18.6%), energy (15.2 vs. 16.3 %), and capital goods (11.0 vs. 12.3%). On the other hand, it accelerated for durable consumer goods (26.4 vs. 24.0 percent). Every month, producer prices rose by 0.9 percent after showing no changes in the previous period.

- BG: Consumer price inflation in Greece decreased for the fifth consecutive month to 6.1% year on year in February 2023, down from 7% the previous month. It was the weakest reading since December 2021, as prices fell mainly for food and soft drinks (14.8% versus 15.4% in January); transport (6.5% vs. 8.1%). Furthermore, prices decreased more rapidly for housing (-4.9% against -0.1%) and communications (-1.6% against -1.1%). Meanwhile, faster increases were recorded for other CPI items such as apparel and footwear (7.1% vs. 6.5%), hotels, cafes, and restaurants (8.1% vs. 7.8%), and leisure and culture (3.5% vs. 3.4%). As a result, on a month-to-month basis, consumer prices rose 0.3% in February after declining 0.5% in the previous month.

- RO: Romania's trade deficit increased to EUR 2.34 billion in January 2023 from EUR 2.11 billion in the same month of the previous year. On an annual basis, imports increased by 6.8% to 9.50 billion euros, supported by higher arrivals of beverages and tobacco (57%), food and live animals (32.5%), and miscellaneous manufactured goods (17% ). Imports from EU countries are increasing (11%), while purchases from non-EU countries are decreasing (-2.8%). At the same time, exports grew by 6% to €7.16 billion as sales increased mainly for mineral fuels, lubricants, and related products (46%), beverages and tobacco (41%), and miscellaneous manufactured goods (10 .5%). Sales abroad increased in EU countries (8.5%) and decreased in non-EU countries (-0.7%).

- DN: Denmark's current account surplus fell to DKK 28.5 billion in January 2023 in seasonally adjusted terms from an upwardly revised DKK 33.9 billion in the previous month, which was the largest amount in three months. The goods account surplus fell to DKK 16.8 billion from DKK 18.1 billion in December, and the services account fell to DKK 4.1 billion from DKK 6.0 billion. In addition, the primary income surplus decreased to DKK 10.0 billion from the previous DKK 12.2 billion. Meanwhile, the secondary income deficit remained unchanged at DKK 2.4 billion. In 2022, the account surplus increased to DKK 357.8 billion from DKK 226.2 in the previous year.

- TR: Retail sales in Turkey rose 33.9% year-on-year in January 2023, the most since April 2021, from a downwardly revised 21.4% increase in the previous month. Sales increased significantly for all categories except pharmaceuticals: food, beverages, and tobacco (24.4% vs. 12.5% in December); non-food products (42.4% vs. 27.4%); textiles, clothing, and footwear (31.1% vs. 9.6%); audio and video equipment, hardware, paint and glass, household appliances, furniture, etc. (49.9% vs. 30%); computers, peripherals and software, books, telecommunications equipment, etc. (66.1% vs. 44.5%); fuels (23.6% vs. 15.9%) and pharmaceutical, medical and orthopedic products, cosmetics and toiletries (8.1% vs. 8.4%). Seasonally adjusted, retail sales rose 5.4% in January, the most since June 2021.

 

LOOKING AHEAD:

Today, investors should watch out for the following important data:

- AUD: Westpac Consumer Sentiment and NAB Business Confidence.

- CHF: PPI m/m.

- USD: NFIB Small Business Index, CPI m/m, CPI y/y, Core CPI m/m, FOMC Member Logan Speaks, FOMC Member Harker Speaks, and FOMC Member Williams Speaks.

- EUR: German WPI m/m, Flash Employment Change q/q, Flash GDP q/q, and ECOFIN Meetings.

- GBP: Claimant Count Change, Average Earnings Index 3m/y, Unemployment Rate, 10-y Bond Auction, and CB Leading Index m/m.

- NZD: Inflation Expectations q/q.

- JPY: Prelim GDP Price Index y/y, Prelim GDP q/q, and Revised Industrial Production m/m

 

KEY EQUITY & BOND MARKET DRIVERS:

Кey factors in the stock and bond market are currently:

- FR: The 10-year OAT yield plunged below 2.8% in mid-March, its lowest level in a month and tracking declines in European and U.S. bond yields as U.S. bank failures forced investors into the safety of government debt, and wiped out bets on a 50 basis point Fed rate hike. The depositors fled to safety despite assurances from U.S. authorities about their protection. Moreover, as the ECB started shrinking its balance sheet two weeks ago, the latter failed to contain concerns about contagion among European banks. Still, money markets showed investors expect the ECB to raise its key interest rate by 50 basis points this week to curb inflation. On the fiscal front, the French Senate voted to raise the mandatory retirement age by two years to 64, defying strong opposition from trade unions.

- IT: Italy's 10-year BTP yield fell below 4.15% in mid-March, its lowest level in more than a month, tracking a global rally in government bonds as major U.S. bank failures forced investors to buy government debt. Fears of contagion have also weighed on banks in Milan, which hold large stakes in Italian bonds that are considered to be held to maturity, despite assurances from U.S. authorities to protect all depositors above FDIC insurance limits. In addition, the European Central Bank is about to announce accelerated quantitative tightening, which intensifies this concern. As a result, the spread between the closely watched Italian 10-year BTP and Germany's 10-year BTP widened to a one-month high of 185 basis points. On the fiscal front, the Italian government's 2022 budget deficit exceeded the government's target by 2.4 percentage points at 8%, as accounting changes prompted the early booking of pandemic tax cuts.

- IN: India's 10-year government bond yield fell below 7.36%, retreating sharply from a four-month high of 7.46% touched on March 8 and tracking a rally in global government bonds as worries over the U.S. financial sector drove investment Investors focused on the safety of public debt and eased concerns from a hawkish Fed. Meanwhile, Indian retail prices rose 6.4% annually in February, beating market expectations of 6.35%, marking the second month that inflation has exceeded the RBI's 6% ceiling. While rates had been expected to peak in the second quarter of this year, rising inflation has prompted money markets to bet the central bank will raise rates by 25 basis points next month. On the growth front, India's GDP expanded by 4.4% in the quarter that ended December, below expectations for a 4.6% increase and a sharp drop from the previous quarter's 6.3% growth.

- AU: In mid-March, Australian 10-year government bond yields fell to 3.4%, the lowest level since late January, amid runaway risk assets and expectations that central banks will pause aggressive tightening following the collapse of Silicon Valley Bank. Investors now believe the Reserve Bank of Australia will stop raising interest rates next month. At its March meeting, the central bank raised its cash rate by 25 basis points to 3.60%, the highest level in a decade, but softened its hawkish guidance on policy.

- JP: The yield on the 10-year Japanese government bond fell to 0.3%, the lowest since mid-December, tracking global bonds higher after the collapse of a Silicon Valley bank prompted investors to flee to safety and scale back bets on higher interest rates. Last week, Japan's key yield fell below the 0.5 percent target ceiling of the Bank of Japan, which has maintained its ultra-loose monetary policy stance in March since late February. At the last policy meeting, Governor Haruhiko Kuroda kept the overnight rate at -0.1% and maintained a bond-buying policy to keep yields in check. While no major changes are expected, some analysts see at least some steps to pave the way for new Governor Kazuo Ueda, who is scheduled to end long-term yield controls this year. Meanwhile, Japan's Diet has confirmed Ueda's appointment as the latest Bank of Japan governor from April 9.

- US: Stock futures contracts tied to the blue-chip Dow and S&P 500 fell 0.4% and 0.1%, respectively, on Monday, while those connected to the Nasdaq 100 rose 0.5%, as investors evaluated a plan that would support all depositors of failed Silicon Valley Bank and provide additional funding for other banks. The U.S. Treasury, the Federal Reserve, and the Federal Deposit Insurance Corporation made two major policy announcements over the weekend to provide liquidity and boost confidence for banks facing deposit outflows. Meanwhile, recent turmoil in the banking system has heightened speculation that the Federal Reserve will continue its current rate hikes, with Goldman Sachs even pausing hikes. The major averages fell sharply on Friday following the SVB crash, with the Dow, S&P 500, and Nasdaq Composite all down more than 4% for the week.

- UK: U.K. 10-year government bond yields fell to 3.4%, touching their lowest level since Feb. 11, amid concerns over the U.S. banking system and uncertainty surrounding U.S. monetary policy. Investors are assessing the possibility that the U.S. Federal Reserve will not rein in interest rates at its next policy meeting on March 21-22, after U.S. authorities stepped in to restore investor confidence after the collapse of a Silicon Valley bank. In the UK, the Bank of England is expected to raise rates by 25 basis points this month, marking the 11th consecutive hike before ending the current tightening cycle. Also in focus this week are UK employment and wages data and Chancellor Jeremy Hunt's new budget.

- GE: Germany's 10-year bond yield fell to 2.3%, the lowest since Feb. 9. Investors are betting on a less aggressive monetary tightening by the Federal Reserve after U.S. authorities stepped up efforts to boost confidence in the banking system following the collapse of Silicon Valley Bank. Elsewhere, despite persistent risks to growth and financial stability, investors awaited the European Central Bank's policy meeting scheduled for Thursday, when policymakers are expected to raise rates by another 50 basis points to fight inflation.

- US: Government bond yields worldwide continued to fall on Monday as investors trimmed bets on higher interest rates. Many now expect the Federal Reserve to cut borrowing costs in the second half of the year following the collapse of Silicon Valley banks. Meanwhile, U.S. authorities' efforts to protect customer deposits and bolster confidence in the banking system sent stocks higher. The US Treasury stepped in and announced that all deposits at SVB and Signature Bank would be protected, while other measures to prevent contagion included a new deposit protection scheme. At the same time, HSBC will acquire SVB UK. The yield on the benchmark U.S. 10-year Treasury note fell below 3.7%, while the 2-year yield fell nearly 18 basis points to 4.41%, the biggest three-day drop since 1987. In Europe, German 10-year bond yields fell almost five basis points to 2.44 percent, and UK gilt yields fell to 3.6 percent, while Asia-Pacific, Australian, and Japanese 10-year bond yields fell nearly ten basis points each: 3.51% and 0.3%.

- SA: South Africa's 10-year government bond yield fell to around 9.99%, its lowest since mid-February, as investors worldwide flocked to the safety of government bonds after the collapse of the lender SBV in the US dashed hopes of aggressive tightening by the Federal Reserve. Nationwide, the South African Reserve Bank is expected to hold its interest rate this month or raise it by 0.25%, as further hikes could hurt the struggling economy. Meanwhile, South Africa's annual inflation rate fell for the third consecutive month to 6.9% in January 2023, from 7.2% in the previous period, although still above the upper limit of the central bank's target range. by 3%-6%.

 

LEADING MARKET SECTORS:

- Strong sectors: Utilities, Real Estate, Health Care, Information Technology, and Communication Services.

- Weak sectors: Financials, Energy, Materials, Industrials.

 

TOP CURRENCY & COMMODITIES MARKET DRIVERS: 

Кey factors in the currency and commodities market are currently:

- USD: The U.S. dollar index fell below the 104 marks on Monday, falling to a three-week low for the third straight session, as investors assessed the prospect of further financial risks following the collapse of Silicon Valley Bank and Signature Bank of New York. In addition to concerns about the health of the broader financial system, the SVB's failure has fueled speculation that the Fed could adopt a less aggressive tightening policy and that Goldman could pause. As a result, compared to the previous week, money markets are now pricing in a more than 70% chance of a 25-basis point rate hike next week. Still, a stronger-than-expected U.S. jobs report on Friday supported further rate hikes. In addition, investors await key U.S. inflation data due on Tuesday for clues on the central bank's path of rate hikes. The most notable selling activity has been against risk-sensitive currencies such as the Australian and New Zealand dollars.

- GBP: Sterling rose above $1.21, hovering near its highest level since Feb. 21 and further away from a more than the three-month low of $1.18 hit on March 8. Investors sold dollars on hopes that the Federal Reserve might take a less aggressive approach to monetary policy after U.S. authorities announced a series of measures to boost confidence in the banking system following the collapse of Silicon Valley banks. Elsewhere, the Bank of England is expected to raise interest rates by 25 basis points this month, its 11th consecutive hike before ending the current tightening cycle. Investors are now awaiting UK employment and wages data due this week, as well as Chancellor Jeremy Hunt's new budget.

- EUR: The euro rose above $1.07, hovering near its highest since Feb. 14, increasing from a two-month low of $1.05 on March 8. Concerns about the U.S. financial system eased after U.S. authorities stepped in to limit the fallout from a sudden collapse of the SVB, adding to the possibility of a more cautious approach by the Fed, raising 25 basis points at its March meeting instead of the 50 previously expected basis points. Meanwhile, investors await the European Central Bank's policy statement on Thursday, with policymakers expected to raise interest rates by 50 basis points. Nonetheless, the ECB is likely to adopt a more dovish stance due to ongoing risks to financial stability.

- CNY: The offshore yuan appreciated $6.9 against the U.S. dollar, recovering further from two-month lows, and there are positive signs of policy continuity, with the current central bank governor and finance and commerce ministers staying on. The yuan also rallied as Silicon Valley bank failures prompted U.S. regulators to protect depositors and financial institutions, fueling speculation that the Fed may adopt less aggressive tightening to avoid further risks to the financial system. Meanwhile, the latest data showed that China's inflation rate fell to a one-year low in February, fueling speculation that the central bank will maintain an accommodative stance. Producer prices also fell for the fifth straight month in February. Last month, as widely expected, the People's Bank of China kept its key lending rate unchanged for the sixth consecutive meeting.

- JPY: The yen strengthened to 133 yen to the dollar, its highest level in nearly a month, as the collapse of a Silicon Valley bank prompted U.S. regulators to protect depositors and financial institutions, fueling speculation that the Fed may take less aggressive measures. They were tightening policy to avoid further risks to the financial system. Domestically, the Bank of Japan left policy on ultra-low interest rates unchanged at its March meeting, the last policy meeting before Governor Haruhiko Kuroda retired. Japanese policymakers also showed no sign of an end to the bank's yield curve control, emphasizing in recent speeches their preference that at least until Kuroda's successor, Kazoo Ueda, takes over as governor in April. Postpone major policy changes.

- NZD: The New Zealand dollar rose above $0.615, rebounding sharply from four-month lows, as Silicon Valley bank failures prompted U.S. regulators to protect savers and financial institutions, fueling speculation that the Federal Reserve could be less aggressive in tightening policy to avoid further risks to the financial system. Still, stronger-than-expected U.S. jobs report they bolstered the Fed's case for further rate hikes, putting downward pressure on the kiwi. Domestically, the Reserve Bank of New Zealand raised interest rates by 50 basis points at its February meeting, a move that was widely expected. The Board believes that increased inflationary pressures, higher price expectations, and a tight labor market are factors they consider. As a result, the Reserve Bank of New Zealand raised its policy rate by 450 basis points in ten meetings in a row, taking the cash rate to a 41-year high of 4.75%.

- AUD: The Australian dollar rose more than 66 cents, rebounding sharply from four-month lows, as Silicon Valley bank failures prompted U.S. regulators to protect depositors and financial institutions, fueling speculation that the U.S. Federal Reserve may be less aggressive. policy tightening measures to avoid further risks to the financial system. That said, a stronger-than-expected U.S. jobs report supported further rate hikes by the Federal Reserve, putting downward pressure on the Aussie. Last week, Reserve Bank of Australia Governor Philip Lowe said the central bank was on the verge of pausing rate hikes as monetary policy became stricter. At its March meeting, the RBA announced a widely expected 25 basis point hike and moderated its hawkish guidance. The central bank raised the cash rate for the tenth time in a row, bringing borrowing costs to an almost 11-year high of 3.6%.

- GAS: US natural gas futures surged by over 7% to above $2.6/MMBtu on Monday, recovering from an almost 3-week low of $2.4 hit earlier in the session on soaring LNG exports and higher demand. The total amount of gas flowing to the seven biggest US LNG export plants has increased to 11.1 bcfd in March 2023 from 12.8 bcfd in February, surpassing a monthly record of 12.9 bcfd hit in March 2022 as the Freeport plant returned to service after the fire-related shutdown in June 2022. Meanwhile, average US gas demand, including exports, is expected to rise to 120.4 bcfd next week from 119.8 bcfd this week, above Refinitiv's outlook on Friday. On the other hand, average gas output in the US Lower 48 states grew to 98.8 bcfd this month, up from 98.2 bcfd in the previous period. On top of that, the latest EIA report showed gas stockpiles were about 22% above their five-year average during the week ended March 3.

- CHF: The Swiss franc strengthened above 0.92 per USD, approaching an 18-month high of 0.9 hit on February 1 as fears surrounding the US financial sector put pressure on the dollar and erased expectations of sharp hikes rate hikes by the Federal Reserve. On the other hand, the hawkish outlook for the Swiss National Bank supported the local currency as policymakers continued to signal risks of high inflation due to the second-round effects of high energy prices. Domestic inflation jumped to 3.4% in February, well above SNB forecasts of 3% and market expectations of 3.1%, adding to bets that the central body will continue its upward path rates next week. Moreover, recent data showed that foreign exchange reserves at the SNB fell to 770.6 billion francs in February, the lowest since 2019

- PLM: Malaysian palm oil futures fell below the MYR 4,100 per tonne mark, the lowest in nearly a month, as the ringgit held at elevated levels and rival vegetable oils retreated. Demand uncertainty from India's top importer also weighed on prices as the country pondered raising import duties on palm oil to support local producers. However, smaller inventories limited the decline. In late February, palm oil inventories of the world's second-largest producer collapsed to a six-month low as production and imports fell, according to data released by the nation's Palm Oil Board. In addition, cargo inspectors showed that Malaysia's palm oil product exports on March 1-10 increased by 45.3% to 52.1% compared to the same period in February.

- URN: Uranium futures fell below the $51 per pound mark, approaching a one-month low of $50.5 on March 2 amid declines in other energy commodities. Weak demand and a warmer winter in major energy economies pushed coal benchmarks to trade near 11-month lows, limiting the need for alternative electricity generation methods. However, supply expectations rose as miners met the increased demand for carbon-neutral energy sources. Cameco announced the reopening of its McArthur River mine, the largest in the world, while Kazatomprom has forecast its production to grow 8%-14% by 2024. To offset the drops, Japan has passed laws to allow nuclear reactors to operate beyond 60 years if safety updates are met.

- COP: Copper futures fell to $4 a pound, approaching a nearly two-month low of $3.95 hit on Feb. 27 as fears of an economic slowdown and some respite from supply shortages to offset expectations of higher demand from China. The jitters in the US banking sector have fueled fears that the Fed is excessively tightening and have raised fears of less economic activity in the coming months. On the supply side, improving conditions at key mines in Peru and Indonesia eased concerns of a broader supply deficit. At the same time, Canada's First Quantum Minerals concluded a profit-sharing deal with the Panamanian government and is expected to take backslapping the decline; the Chinese government set a 5% growth target for this year during its session of the National People's Congress and confirmed the arrival of stimulus for infrastructure and construction.

 

CHART OF THE DAY:

On Monday, Bitcoin surged over 12% to clear $24,000 to close at its highest level since June 2022 as fears of SVB contagion in the broader banking sector eased. US regulators have announced a series of emergency measures to provide liquidity following the collapse of Silicon Valley Bank and New York-based Signature Bank. Investors were also betting that the Federal Reserve would be less aggressive in raising interest rates, which, in turn, has ignited appetite for recently defeated cryptocurrencies. As a result, Ethereum also saw its value rise sharply, rising more than 7% to trade around $1,700.

 

 

 

Long-term Channels Trading Strategy: - BTCUSD -; Chart with time-frame (D1); The primary Resistance with a potential (target area) is around ~ ( 25083 ),  and the direct Support with a prospect (target consolidation area) is everywhere ~ ( 18988 ).  Therefore, the next most probable price movement is an (up / sideways) trend. *see details on the chart.

GLOBAL CAPITAL MARKETS OVERVIEW, ANALYSIS & FORECASTS: Author: Dr. Alexander APOSTOLOV (researcher at Economic Research Institute at BAS) European stocks tumbled to two-month lows on Monday after U.S. lender Silicon Valley Bank collapsed, sending European banks to their worst day in over a year. The Pangea Stoxx 600 index fell 2.3%, and the Stoxx banks index fell more than 5% after HSBC bought SVB's UK arm in a government-driven private sale to protect depositors. Germany's DAX fell 3% to below 14960, its lowest level since Jan. 19, with Commerzbank (-10%) leading the gains. Meanwhile, investors continued to focus on the latest efforts by the U.S. government to bolster confidence in the banking system and reduce the risk of contagion from bank failures by announcing it would protect "all depositors" at SVB and establish a new lending program. Investors should turn to Tuesday's US inflation data, Wednesday's new UK budget, and Thursday's European Central Bank meeting. On Monday, the CAC 40 plunged about 2.9 percent to close at a more than seven-week low of 7,012, its fifth straight session of losses and in line with regional peers. Investors continued to assess the risk of a sudden collapse of SVB despite intervention by U.S. authorities to support the banking system. Traders cautiously await tomorrow's highly anticipated U.S. inflation data amid growing speculation that the Federal Reserve will pause interest rate hikes. Locally, President Emmanuel Macron's unpopular pension reform plan was passed by the French Senate on Saturday night, sparking another wave of protests in France. On the corporate front, all index constituents closed in the red, led by financials, including BNP Paribas (-6.8%), Société Générale (-6.2%), Axa (-5.9%) and Crédit Agricole (- 3.1%). In addition, Alstom (-6.2), ArcelorMittal (-5.3%), and TotalEnergies (-5%) also fell sharply. The FTSE MIB fell 4% to close at 26,183 on Monday, its worst session since June 2022, as Milan financials underperformed their European peers due to their heavy weight in the benchmark stock index. Banks and insurers led losses on fears of contagion after the collapse of SVB in the U.S. led to the failure and sell-off of several other U.S. banks. At the same time, volatility in Italian bonds has prompted Italian heavyweights to book more positions in debt securities in held-to-maturity due to high levels of Italian debt, exposing Italian lenders to greater risk. BPER Banca, UniCredit, and Banco BPM were the biggest intraday losers, plunging 9.5%-8% intraday, while other banks fell sharply. Meanwhile, investors cautiously await a new U.S. CPI inflation report due Tuesday and the European Central Bank meeting later this week. The IBEX 35 plunged to 9240 on Friday, following its European counterparts, dragged down by financial losses amid signs of stress in the US banking sector after tech lender SVB Financial announced a capital raise to shore up its balance sheet due to the decline in its customers' deposits. Rate hike fears also persisted, given today's crucial US jobs. On the corporate front, Banco Santander was the laggard (-5.03%), followed by Banco Sabadell (-4.26%) and Bankinter (-4.34%). Among the few protagonists were Iberdrola and Endesa. The latter announced the planned sale of its renewables division to be a hydrogen manager. Meanwhile, Iberdrola's U.S. subsidiary Avangrid and PNM Resources filed a joint petition with the New Mexico Public Regulatory Commission to drop the appeal against their merger. London stocks fell for a third straight session on Monday, dragged down by the energy and financial sectors, with the benchmark FTSE 100 down nearly 3% to close at a more than two-month low of 7,550. Risk appetite in Europe remains subdued in light of the recent turmoil in the U.S. banking sector, despite steps by authorities to stem the fallout from Silicon Valley bank failures. Investors also digested reports of HSBC buying the UK arm of SVB in a private sale brokered by the government to protect depositors. Among individual stocks, HSBC, Mid-tier Capital Group, Barclays, and Standard Chartered were the biggest losers, falling between 3.5% and 6.7%. Oil giant BP also came under intense selling pressure, falling more than 4%. The ruble-based MOEX Russia index erased earlier gains to close 0.3% lower at 2,270 on Monday, paring last week's gains under pressure from energy producers and banks. At the same time, investors focused on blue-chip companies—Dividend announcements. The financial sector was under the most pressure, with Moscow Exchange shares falling nearly 3 percent as investors continued to assess a disappointing dividend figure recommended by its board. Sberbank also closed in the red as investors further digested its year-end 2022 results to see how the bank would turn around its business following last year's sanctions. On the other hand, a handful of banks closed in the green, underscoring the isolation of Russia's financial markets from those in the West, as companies appeared unaffected by the U.S. bank collapse. Meanwhile, soaring gold prices supported Polymetal and Polus up 5.9 percent and 4 percent, respectively. Wall Street turned an initial sell-off into a rebound Monday morning, with the Dow up nearly 200 points, the S&P 500 and Nasdaq 100 up 0.5 percent and 1.5 percent, respectively, amid growing speculation that financial turmoil could force The Fed to pause its tightening cycle. Big Tech and other growth stocks gained traction, while the bank relief proved short-lived. The collapse of Silicon Valley Bank and New York-based Signature Bank has raised concerns about the risks to other banks from the Fed's biggest cycle of rate hikes since the early 1980s. However, it also sparked fresh speculation about a policy shift. Goldman Sachs was among the first to say it no longer expects the Fed to raise rates at its March 22 meeting. Investor concerns over possible contagion effects in the wider banking sector also eased after U.S. regulators announced a series of emergency measures to provide liquidity. The Canada S&P/TSX composite index fell nearly 2% on Monday, hovering below 19,500, tracking Wall Street's plunge amid concerns about the stability of the U.S. financial sector following the collapse of Silicon Valley banks. Toronto-traded banks plunged more than 3 percent on average, with BMO and TD Bank down 4.7 percent and 3.5 percent, respectively. In addition, domestic banking regulators temporarily took control of SVB's Canadian branch. Energy producers also recorded heavy losses as ensuing recession fears weighed on crude prices. As a result, oil and gas producers fell an average of 4%. On the other hand, higher precious metal prices supported a nearly 2% rise in Canadian gold miners.  Around noon on Monday, New Zealand stocks fell 102 points, or 0.87%, to close at 11,625 points, hovering at their lowest level in 2-1/2 months, while Wall Street stocks sold off sharply on Friday, the largest since the 2008 financial crisis in the United States—the aftermath of the collapse of the largest bank. U.S. banking regulators took control of Silicon Valley bank on Friday after failing to raise new capital. Meanwhile, Treasury Secretary Janet Yellen said on Sunday that the government would not bail out banks despite efforts to limit losses from the collapse. Domestically, food prices in New Zealand rose 12% year-on-year in February, the highest level since September 1989, with groceries accounting for the biggest increase. However, nearly all sectors fell, dragged down by electronic technology, health care, energy mining, and financials. Comvita NPV fell 4.5%, followed by Gentrack Group (-3.9%), Chorus Ltd (-2.2%), Serko Ltd (-2.2%), and Skellerup Hlds. (-1.6%). On Monday, the China Shanghai Composite Index rose 0.3% to close above 3,235 points, ending a five-day losing streak, with positive signs of policy continuity, with the current central bank governor, finance minister, and commerce minister staying on. The National People's Congress will also close with a press conference chaired by appointed Premier Li Qiang. Meanwhile, investors remained wary of further systemic risks after the Silicon Valley bank's collapse, even as U.S. regulators announced plans to support depositors and offer new lending programs to financial institutions. As a result, heavyweight companies such as China Telecom (5.3%), ZTE Corporation (4.6%), TBEA (8%), China Great Wall (9.1%), and PetroChina Capital (9.6%) rose significantly. In early trading on Monday, the Hang Seng Index rose 174 points, or 0.9%, to 19,494, snapping losses in the previous four sessions. Gains in U.S. stock futures pushed the Hang Seng higher after U.S. regulators announced that all Silicon Valley Bank depositors would have access to their funds starting today. The Fed also said it was creating a new bank term funding program designed to protect deposits. On the mainland, China's central bank governor and finance minister unexpectedly stayed at the annual meeting amid looming economic challenges at home and abroad. Energy, technology, consumer, and financial stocks led to gains led by China Resources Beer. (4.2%), CNOOC (4%), Tencent Holdings. (2.8%), Haier Smart Home (2.4%), NetEase Co., Ltd. (2%), and China Mobile (1.7%). On Friday, Hong Kong stocks erased their 2023 gains and fell about 3%, near their lowest level in nearly 11 months, as the chip war between Washington and Beijing continued. The India BSE Sensex fell 900 points to close at 58,240 on Monday, its third session of losses to its lowest level in five months, as the collapse of the U.S. Silicon Valley Bank hurt global financial stocks. Indus Ind Bank and Axis Bank fell 3.2% and 2%, respectively, while State Bank of India plunged 7.4% as RBI approved reappointments. However, the bank's chief executive's time was shorter than expected. Tech Mahindra shares, on the other hand, soared 7.1% after the company appointed a new CEO and inspired investor confidence. Meanwhile, traders awaited RPI data for February, due shortly after the close, which is expected to show retail inflation remains above the RBI's upper-bound target of 6% for the period. Higher inflationary pressures at the start of the year led money markets to price in a 25-basis point rate hike by the central bank in April.   REVIEWING THE LAST ECONOMIC DATA: Reviewing the latest economic  news, the most critical data is: - US: U.S. consumers’ inflation expectations for the year ahead fell sharply to 4.2% in February 2023, the lowest level since May 2021, from 5% in the previous two months. Consumers expect gasoline (-0.4 percentage points to 4.7%), food (-1.7 percentage points to 7.3%), health care (-0.3 percentage points to 9.4%), college education (-1.2 percentage points to 8.1%) and rent (-0.2 percentage points to 9.4%) prices will rise at a slower pace. On the other hand, median house price growth expectations rose 0.3 percentage points to 1.4%, three-year inflation expectations were unchanged at 2.7%, and five-year growth expectations rose 0.1 percentage points to 2.6%. At the same time, labor market expectations and households' perceptions and expectations of current and future financial conditions also improved. - IT: Shares in Milan fell for a third straight session on Monday, with the FTSE MIB index falling more than 4% to a six-week low of 26,105, underperforming regional peers. Banks are under pressure despite U.S. authorities' decision to shore up the banking system following the collapse of Silicon Valley Bank late last week and Signature Bank this weekend. Bper Banca (-9.2%), Banco Bpm (-8.3%), Finecobank (-7.9%), and Intesa Sanpaolo (-7.4%) were the hardest hit. Meanwhile, investors cautiously await a new U.S. CPI inflation report due Tuesday and the European Central Bank meeting later this week. - IT: Shares in Milan fell for a third straight session on Monday, with the FTSE MIB index falling more than 2% to a five-week low of 26,722, underperforming regional peers. Banks are under pressure despite U.S. authorities' decision to shore up the banking system following the collapse of Silicon Valley Bank late last week and Signature Bank this weekend. Bper Banca (-4.6%), Banco Bpm (-3.8%), and Intesa Sanpaolo (-3.5%) led a decline. However, Leonardo (+2.3%) continues to benefit from a positive result in 2022. Meanwhile, investors cautiously await a new U.S. CPI inflation report due Tuesday and the European Central Bank meeting later this week. - JP: In the first quarter of 2023, the business survey index of Japan's large manufacturing companies fell to -10.5% from -3.6% in the previous quarter, as higher import costs and raw material prices squeezed corporate profit margins and global economic uncertainty Sex continues to weigh on business confidence. The latest figure is also the lowest reading since the second quarter of 2020. The business survey index measures the percentage of firms that expect business conditions to improve from the previous quarter minus the percentage that expects business conditions to worsen. Japan's large manufacturing companies expect business conditions to improve in the coming months, with an outlook of -0.7% in the second quarter and a further increase to 6% in the third quarter. - NZ: In February 2023, food prices in New Zealand rose 12% year-on-year, the largest increase since September 1989, after rising 10.3% in January. Grocery foods were the biggest contributors (12%), namely barn- or cage-raised eggs, potato chips, and cheddar cheese. The second largest contributors were fruits and vegetables (23%), mainly tomatoes (117%) and potatoes (48%). Other big increases were seen in restaurant meals and ready-to-eat food prices (8.4 percent); meat, poultry, and fish (9.8 percent); and food prices, which rose 1.5 percent from the previous month. - NZ: New Zealand's BusinessNZ Performance of Services Index rose to 55.8 in February 2023 from 54.7 in January, indicating the strongest growth in the services sector in four months. Activity/sales (53.6 vs. 52.1), new orders/business (57.1 vs. 54.8), inventories (58.3 vs. 54.7), and supplier deliveries (55.9 vs. 52.3) all increased. At the same time, the employment sub-index fell slightly (51.2 vs. 51.6). Meanwhile, negative reviews fell to 51.9 percent in February from 61.7 percent in January. The reasons varied among those who gave positive comments, with customers returning after the holidays and a general pick-up in tourism, including overseas visitors. However, NZ senior economist Craig Ebert said, "the strongly expanding PSI, and the recovering tone of the PMI, suggest that economic activity has grown relatively well in the early part of the year." - NZ: Food prices in New Zealand rose 12% year-on-year in February 2023, the biggest increase since September 1989, following a 10.3% increase in January. Grocery store food was the largest contributor (12%), namely barn-raised or cage-raised eggs, French fries, and cheddar cheese. The second largest contributor came from fruit and vegetables (23%), mainly tomatoes (117%) and potatoes (48%). Other strong increases were also recorded for restaurant meals and ready-to-eat food prices (8.4%); meat, poultry, and fish (9.8%); and soft drinks (9.1%). Compared to the previous month, food prices increased by 1.5%. - SR: The annual inflation rate in Serbia rose to 16.1% in February 2023, extending an all-time high of 15.8% from the previous month and well above expectations of 15.6%, despite the 475 basis points of interest rate increases for 12 consecutive months. As energy and rent inflation weighed on consumer costs, consumer prices co. Continued to accelerate for food and soft drinks (24.6.% vs. 23.7% in January) and housing and utilities (24% vs 23%). Conversely, price growth slowed down for transport (6.6% against 7.5%). As a result, every month, Serbian consumer prices increased by 1.4% in February. - BH: Producer prices in Bosnia and Herzegovina increased by 16.2% year on year in January 2023, the lowest since March 2022, compared with a 17.6% increase in the previous month. Inflation slowed for intermediate goods (17.0 vs. 19.0% in December), non-durable consumer goods (17.0 vs. 18.6%), energy (15.2 vs. 16.3 %), and capital goods (11.0 vs. 12.3%). On the other hand, it accelerated for durable consumer goods (26.4 vs. 24.0 percent). Every month, producer prices rose by 0.9 percent after showing no changes in the previous period. - BG: Consumer price inflation in Greece decreased for the fifth consecutive month to 6.1% year on year in February 2023, down from 7% the previous month. It was the weakest reading since December 2021, as prices fell mainly for food and soft drinks (14.8% versus 15.4% in January); transport (6.5% vs. 8.1%). Furthermore, prices decreased more rapidly for housing (-4.9% against -0.1%) and communications (-1.6% against -1.1%). Meanwhile, faster increases were recorded for other CPI items such as apparel and footwear (7.1% vs. 6.5%), hotels, cafes, and restaurants (8.1% vs. 7.8%), and leisure and culture (3.5% vs. 3.4%). As a result, on a month-to-month basis, consumer prices rose 0.3% in February after declining 0.5% in the previous month. - RO: Romania's trade deficit increased to EUR 2.34 billion in January 2023 from EUR 2.11 billion in the same month of the previous year. On an annual basis, imports increased by 6.8% to 9.50 billion euros, supported by higher arrivals of beverages and tobacco (57%), food and live animals (32.5%), and miscellaneous manufactured goods (17% ). Imports from EU countries are increasing (11%), while purchases from non-EU countries are decreasing (-2.8%). At the same time, exports grew by 6% to €7.16 billion as sales increased mainly for mineral fuels, lubricants, and related products (46%), beverages and tobacco (41%), and miscellaneous manufactured goods (10 .5%). Sales abroad increased in EU countries (8.5%) and decreased in non-EU countries (-0.7%). - DN: Denmark's current account surplus fell to DKK 28.5 billion in January 2023 in seasonally adjusted terms from an upwardly revised DKK 33.9 billion in the previous month, which was the largest amount in three months. The goods account surplus fell to DKK 16.8 billion from DKK 18.1 billion in December, and the services account fell to DKK 4.1 billion from DKK 6.0 billion. In addition, the primary income surplus decreased to DKK 10.0 billion from the previous DKK 12.2 billion. Meanwhile, the secondary income deficit remained unchanged at DKK 2.4 billion. In 2022, the account surplus increased to DKK 357.8 billion from DKK 226.2 in the previous year. - TR: Retail sales in Turkey rose 33.9% year-on-year in January 2023, the most since April 2021, from a downwardly revised 21.4% increase in the previous month. Sales increased significantly for all categories except pharmaceuticals: food, beverages, and tobacco (24.4% vs. 12.5% in December); non-food products (42.4% vs. 27.4%); textiles, clothing, and footwear (31.1% vs. 9.6%); audio and video equipment, hardware, paint and glass, household appliances, furniture, etc. (49.9% vs. 30%); computers, peripherals and software, books, telecommunications equipment, etc. (66.1% vs. 44.5%); fuels (23.6% vs. 15.9%) and pharmaceutical, medical and orthopedic products, cosmetics and toiletries (8.1% vs. 8.4%). Seasonally adjusted, retail sales rose 5.4% in January, the most since June 2021.   LOOKING AHEAD: Today, investors should watch out for the following important data: - AUD: Westpac Consumer Sentiment and NAB Business Confidence. - CHF: PPI m/m. - USD: NFIB Small Business Index, CPI m/m, CPI y/y, Core CPI m/m, FOMC Member Logan Speaks, FOMC Member Harker Speaks, and FOMC Member Williams Speaks. - EUR: German WPI m/m, Flash Employment Change q/q, Flash GDP q/q, and ECOFIN Meetings. - GBP: Claimant Count Change, Average Earnings Index 3m/y, Unemployment Rate, 10-y Bond Auction, and CB Leading Index m/m. - NZD: Inflation Expectations q/q. - JPY: Prelim GDP Price Index y/y, Prelim GDP q/q, and Revised Industrial Production m/m   KEY EQUITY & BOND MARKET DRIVERS: Кey factors in the stock and bond market are currently: - FR: The 10-year OAT yield plunged below 2.8% in mid-March, its lowest level in a month and tracking declines in European and U.S. bond yields as U.S. bank failures forced investors into the safety of government debt, and wiped out bets on a 50 basis point Fed rate hike. The depositors fled to safety despite assurances from U.S. authorities about their protection. Moreover, as the ECB started shrinking its balance sheet two weeks ago, the latter failed to contain concerns about contagion among European banks. Still, money markets showed investors expect the ECB to raise its key interest rate by 50 basis points this week to curb inflation. On the fiscal front, the French Senate voted to raise the mandatory retirement age by two years to 64, defying strong opposition from trade unions. - IT: Italy's 10-year BTP yield fell below 4.15% in mid-March, its lowest level in more than a month, tracking a global rally in government bonds as major U.S. bank failures forced investors to buy government debt. Fears of contagion have also weighed on banks in Milan, which hold large stakes in Italian bonds that are considered to be held to maturity, despite assurances from U.S. authorities to protect all depositors above FDIC insurance limits. In addition, the European Central Bank is about to announce accelerated quantitative tightening, which intensifies this concern. As a result, the spread between the closely watched Italian 10-year BTP and Germany's 10-year BTP widened to a one-month high of 185 basis points. On the fiscal front, the Italian government's 2022 budget deficit exceeded the government's target by 2.4 percentage points at 8%, as accounting changes prompted the early booking of pandemic tax cuts. - IN: India's 10-year government bond yield fell below 7.36%, retreating sharply from a four-month high of 7.46% touched on March 8 and tracking a rally in global government bonds as worries over the U.S. financial sector drove investment Investors focused on the safety of public debt and eased concerns from a hawkish Fed. Meanwhile, Indian retail prices rose 6.4% annually in February, beating market expectations of 6.35%, marking the second month that inflation has exceeded the RBI's 6% ceiling. While rates had been expected to peak in the second quarter of this year, rising inflation has prompted money markets to bet the central bank will raise rates by 25 basis points next month. On the growth front, India's GDP expanded by 4.4% in the quarter that ended December, below expectations for a 4.6% increase and a sharp drop from the previous quarter's 6.3% growth. - AU: In mid-March, Australian 10-year government bond yields fell to 3.4%, the lowest level since late January, amid runaway risk assets and expectations that central banks will pause aggressive tightening following the collapse of Silicon Valley Bank. Investors now believe the Reserve Bank of Australia will stop raising interest rates next month. At its March meeting, the central bank raised its cash rate by 25 basis points to 3.60%, the highest level in a decade, but softened its hawkish guidance on policy. - JP: The yield on the 10-year Japanese government bond fell to 0.3%, the lowest since mid-December, tracking global bonds higher after the collapse of a Silicon Valley bank prompted investors to flee to safety and scale back bets on higher interest rates. Last week, Japan's key yield fell below the 0.5 percent target ceiling of the Bank of Japan, which has maintained its ultra-loose monetary policy stance in March since late February. At the last policy meeting, Governor Haruhiko Kuroda kept the overnight rate at -0.1% and maintained a bond-buying policy to keep yields in check. While no major changes are expected, some analysts see at least some steps to pave the way for new Governor Kazuo Ueda, who is scheduled to end long-term yield controls this year. Meanwhile, Japan's Diet has confirmed Ueda's appointment as the latest Bank of Japan governor from April 9. - US: Stock futures contracts tied to the blue-chip Dow and S&P 500 fell 0.4% and 0.1%, respectively, on Monday, while those connected to the Nasdaq 100 rose 0.5%, as investors evaluated a plan that would support all depositors of failed Silicon Valley Bank and provide additional funding for other banks. The U.S. Treasury, the Federal Reserve, and the Federal Deposit Insurance Corporation made two major policy announcements over the weekend to provide liquidity and boost confidence for banks facing deposit outflows. Meanwhile, recent turmoil in the banking system has heightened speculation that the Federal Reserve will continue its current rate hikes, with Goldman Sachs even pausing hikes. The major averages fell sharply on Friday following the SVB crash, with the Dow, S&P 500, and Nasdaq Composite all down more than 4% for the week. - UK: U.K. 10-year government bond yields fell to 3.4%, touching their lowest level since Feb. 11, amid concerns over the U.S. banking system and uncertainty surrounding U.S. monetary policy. Investors are assessing the possibility that the U.S. Federal Reserve will not rein in interest rates at its next policy meeting on March 21-22, after U.S. authorities stepped in to restore investor confidence after the collapse of a Silicon Valley bank. In the UK, the Bank of England is expected to raise rates by 25 basis points this month, marking the 11th consecutive hike before ending the current tightening cycle. Also in focus this week are UK employment and wages data and Chancellor Jeremy Hunt's new budget. - GE: Germany's 10-year bond yield fell to 2.3%, the lowest since Feb. 9. Investors are betting on a less aggressive monetary tightening by the Federal Reserve after U.S. authorities stepped up efforts to boost confidence in the banking system following the collapse of Silicon Valley Bank. Elsewhere, despite persistent risks to growth and financial stability, investors awaited the European Central Bank's policy meeting scheduled for Thursday, when policymakers are expected to raise rates by another 50 basis points to fight inflation. - US: Government bond yields worldwide continued to fall on Monday as investors trimmed bets on higher interest rates. Many now expect the Federal Reserve to cut borrowing costs in the second half of the year following the collapse of Silicon Valley banks. Meanwhile, U.S. authorities' efforts to protect customer deposits and bolster confidence in the banking system sent stocks higher. The US Treasury stepped in and announced that all deposits at SVB and Signature Bank would be protected, while other measures to prevent contagion included a new deposit protection scheme. At the same time, HSBC will acquire SVB UK. The yield on the benchmark U.S. 10-year Treasury note fell below 3.7%, while the 2-year yield fell nearly 18 basis points to 4.41%, the biggest three-day drop since 1987. In Europe, German 10-year bond yields fell almost five basis points to 2.44 percent, and UK gilt yields fell to 3.6 percent, while Asia-Pacific, Australian, and Japanese 10-year bond yields fell nearly ten basis points each: 3.51% and 0.3%. - SA: South Africa's 10-year government bond yield fell to around 9.99%, its lowest since mid-February, as investors worldwide flocked to the safety of government bonds after the collapse of the lender SBV in the US dashed hopes of aggressive tightening by the Federal Reserve. Nationwide, the South African Reserve Bank is expected to hold its interest rate this month or raise it by 0.25%, as further hikes could hurt the struggling economy. Meanwhile, South Africa's annual inflation rate fell for the third consecutive month to 6.9% in January 2023, from 7.2% in the previous period, although still above the upper limit of the central bank's target range. by 3%-6%.   LEADING MARKET SECTORS: - Strong sectors: Utilities, Real Estate, Health Care, Information Technology, and Communication Services. - Weak sectors: Financials, Energy, Materials, Industrials.   TOP CURRENCY & COMMODITIES MARKET DRIVERS:  Кey factors in the currency and commodities market are currently: - USD: The U.S. dollar index fell below the 104 marks on Monday, falling to a three-week low for the third straight session, as investors assessed the prospect of further financial risks following the collapse of Silicon Valley Bank and Signature Bank of New York. In addition to concerns about the health of the broader financial system, the SVB's failure has fueled speculation that the Fed could adopt a less aggressive tightening policy and that Goldman could pause. As a result, compared to the previous week, money markets are now pricing in a more than 70% chance of a 25-basis point rate hike next week. Still, a stronger-than-expected U.S. jobs report on Friday supported further rate hikes. In addition, investors await key U.S. inflation data due on Tuesday for clues on the central bank's path of rate hikes. The most notable selling activity has been against risk-sensitive currencies such as the Australian and New Zealand dollars. - GBP: Sterling rose above $1.21, hovering near its highest level since Feb. 21 and further away from a more than the three-month low of $1.18 hit on March 8. Investors sold dollars on hopes that the Federal Reserve might take a less aggressive approach to monetary policy after U.S. authorities announced a series of measures to boost confidence in the banking system following the collapse of Silicon Valley banks. Elsewhere, the Bank of England is expected to raise interest rates by 25 basis points this month, its 11th consecutive hike before ending the current tightening cycle. Investors are now awaiting UK employment and wages data due this week, as well as Chancellor Jeremy Hunt's new budget. - EUR: The euro rose above $1.07, hovering near its highest since Feb. 14, increasing from a two-month low of $1.05 on March 8. Concerns about the U.S. financial system eased after U.S. authorities stepped in to limit the fallout from a sudden collapse of the SVB, adding to the possibility of a more cautious approach by the Fed, raising 25 basis points at its March meeting instead of the 50 previously expected basis points. Meanwhile, investors await the European Central Bank's policy statement on Thursday, with policymakers expected to raise interest rates by 50 basis points. Nonetheless, the ECB is likely to adopt a more dovish stance due to ongoing risks to financial stability. - CNY: The offshore yuan appreciated $6.9 against the U.S. dollar, recovering further from two-month lows, and there are positive signs of policy continuity, with the current central bank governor and finance and commerce ministers staying on. The yuan also rallied as Silicon Valley bank failures prompted U.S. regulators to protect depositors and financial institutions, fueling speculation that the Fed may adopt less aggressive tightening to avoid further risks to the financial system. Meanwhile, the latest data showed that China's inflation rate fell to a one-year low in February, fueling speculation that the central bank will maintain an accommodative stance. Producer prices also fell for the fifth straight month in February. Last month, as widely expected, the People's Bank of China kept its key lending rate unchanged for the sixth consecutive meeting. - JPY: The yen strengthened to 133 yen to the dollar, its highest level in nearly a month, as the collapse of a Silicon Valley bank prompted U.S. regulators to protect depositors and financial institutions, fueling speculation that the Fed may take less aggressive measures. They were tightening policy to avoid further risks to the financial system. Domestically, the Bank of Japan left policy on ultra-low interest rates unchanged at its March meeting, the last policy meeting before Governor Haruhiko Kuroda retired. Japanese policymakers also showed no sign of an end to the bank's yield curve control, emphasizing in recent speeches their preference that at least until Kuroda's successor, Kazoo Ueda, takes over as governor in April. Postpone major policy changes. - NZD: The New Zealand dollar rose above $0.615, rebounding sharply from four-month lows, as Silicon Valley bank failures prompted U.S. regulators to protect savers and financial institutions, fueling speculation that the Federal Reserve could be less aggressive in tightening policy to avoid further risks to the financial system. Still, stronger-than-expected U.S. jobs report they bolstered the Fed's case for further rate hikes, putting downward pressure on the kiwi. Domestically, the Reserve Bank of New Zealand raised interest rates by 50 basis points at its February meeting, a move that was widely expected. The Board believes that increased inflationary pressures, higher price expectations, and a tight labor market are factors they consider. As a result, the Reserve Bank of New Zealand raised its policy rate by 450 basis points in ten meetings in a row, taking the cash rate to a 41-year high of 4.75%. - AUD: The Australian dollar rose more than 66 cents, rebounding sharply from four-month lows, as Silicon Valley bank failures prompted U.S. regulators to protect depositors and financial institutions, fueling speculation that the U.S. Federal Reserve may be less aggressive. policy tightening measures to avoid further risks to the financial system. That said, a stronger-than-expected U.S. jobs report supported further rate hikes by the Federal Reserve, putting downward pressure on the Aussie. Last week, Reserve Bank of Australia Governor Philip Lowe said the central bank was on the verge of pausing rate hikes as monetary policy became stricter. At its March meeting, the RBA announced a widely expected 25 basis point hike and moderated its hawkish guidance. The central bank raised the cash rate for the tenth time in a row, bringing borrowing costs to an almost 11-year high of 3.6%. - GAS: US natural gas futures surged by over 7% to above $2.6/MMBtu on Monday, recovering from an almost 3-week low of $2.4 hit earlier in the session on soaring LNG exports and higher demand. The total amount of gas flowing to the seven biggest US LNG export plants has increased to 11.1 bcfd in March 2023 from 12.8 bcfd in February, surpassing a monthly record of 12.9 bcfd hit in March 2022 as the Freeport plant returned to service after the fire-related shutdown in June 2022. Meanwhile, average US gas demand, including exports, is expected to rise to 120.4 bcfd next week from 119.8 bcfd this week, above Refinitiv's outlook on Friday. On the other hand, average gas output in the US Lower 48 states grew to 98.8 bcfd this month, up from 98.2 bcfd in the previous period. On top of that, the latest EIA report showed gas stockpiles were about 22% above their five-year average during the week ended March 3. - CHF: The Swiss franc strengthened above 0.92 per USD, approaching an 18-month high of 0.9 hit on February 1 as fears surrounding the US financial sector put pressure on the dollar and erased expectations of sharp hikes rate hikes by the Federal Reserve. On the other hand, the hawkish outlook for the Swiss National Bank supported the local currency as policymakers continued to signal risks of high inflation due to the second-round effects of high energy prices. Domestic inflation jumped to 3.4% in February, well above SNB forecasts of 3% and market expectations of 3.1%, adding to bets that the central body will continue its upward path rates next week. Moreover, recent data showed that foreign exchange reserves at the SNB fell to 770.6 billion francs in February, the lowest since 2019 - PLM: Malaysian palm oil futures fell below the MYR 4,100 per tonne mark, the lowest in nearly a month, as the ringgit held at elevated levels and rival vegetable oils retreated. Demand uncertainty from India's top importer also weighed on prices as the country pondered raising import duties on palm oil to support local producers. However, smaller inventories limited the decline. In late February, palm oil inventories of the world's second-largest producer collapsed to a six-month low as production and imports fell, according to data released by the nation's Palm Oil Board. In addition, cargo inspectors showed that Malaysia's palm oil product exports on March 1-10 increased by 45.3% to 52.1% compared to the same period in February. - URN: Uranium futures fell below the $51 per pound mark, approaching a one-month low of $50.5 on March 2 amid declines in other energy commodities. Weak demand and a warmer winter in major energy economies pushed coal benchmarks to trade near 11-month lows, limiting the need for alternative electricity generation methods. However, supply expectations rose as miners met the increased demand for carbon-neutral energy sources. Cameco announced the reopening of its McArthur River mine, the largest in the world, while Kazatomprom has forecast its production to grow 8%-14% by 2024. To offset the drops, Japan has passed laws to allow nuclear reactors to operate beyond 60 years if safety updates are met. - COP: Copper futures fell to $4 a pound, approaching a nearly two-month low of $3.95 hit on Feb. 27 as fears of an economic slowdown and some respite from supply shortages to offset expectations of higher demand from China. The jitters in the US banking sector have fueled fears that the Fed is excessively tightening and have raised fears of less economic activity in the coming months. On the supply side, improving conditions at key mines in Peru and Indonesia eased concerns of a broader supply deficit. At the same time, Canada's First Quantum Minerals concluded a profit-sharing deal with the Panamanian government and is expected to take backslapping the decline; the Chinese government set a 5% growth target for this year during its session of the National People's Congress and confirmed the arrival of stimulus for infrastructure and construction.   CHART OF THE DAY: On Monday, Bitcoin surged over 12% to clear $24,000 to close at its highest level since June 2022 as fears of SVB contagion in the broader banking sector eased. US regulators have announced a series of emergency measures to provide liquidity following the collapse of Silicon Valley Bank and New York-based Signature Bank. Investors were also betting that the Federal Reserve would be less aggressive in raising interest rates, which, in turn, has ignited appetite for recently defeated cryptocurrencies. As a result, Ethereum also saw its value rise sharply, rising more than 7% to trade around $1,700.       Long-term Channels Trading Strategy: - BTCUSD -; Chart with time-frame (D1); The primary Resistance with a potential (target area) is around ~ ( 25083 ),  and the direct Support with a prospect (target consolidation area) is everywhere ~ ( 18988 ).  Therefore, the next most probable price movement is an (up / sideways) trend. *see details on the chart.