GLOBAL CAPITAL MARKETS OVERVIEW, ANALYSIS & FORECASTS:

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

The Baltic Exchange's leading shipping index, which measures the cost of shipping goods worldwide, edged up for the 18th consecutive session on Tuesday, climbing about 8.3% to its highest level since December 22 at 1,587 points, as demand remained strong across all vessel segments. The capesize index, which tracks iron ore and coal cargoes of 150,000 tons, rose for the 17th consecutive day, jumping 15.9% to a more than 11-week high of 2,110 points; and the Panamax index, which tracks cargoes of coal or grain from about 60,000 tons to 70,000 tons, rose 3.8% to a more than the four-month high of 1,743 points. Among smaller vessels, the supramax index increased by 28 points to 1,263 points.

European shares rebounded from a two-day sell-off on Tuesday, with the benchmark Stoxx 600 gaining 1.7% after plunging 2.4% in the previous session, with the banking sector recovering more than 2.5% from its worst day in a year. Domestically, Germany's DAX gained 1.9% after falling 3% on Monday, with Deutsche Bank and Commerzbank each up more than 4%. Elsewhere, HSBC rose about 1.5 percent after the bank said it planned to inject 2 billion pounds of liquidity into SVB's UK unit. In other corporate headlines, shoemaker Tod's, insurer Generali and airport operator Flughafen Zurich rose after their latest earnings reports. Investors hoped that U.S. policymakers might take a less aggressive approach to monetary policy after Silicon Valley banks collapsed and U.S. inflation slowed again. The latest data showed that U.S. inflation fell to 6% in February, the lowest since September 2021. On Tuesday, the CAC 40 index rose to close at 7,142 points, or about 1.9%, on its worst day of the year, ending a five-day losing streak. The rise, broadly in line with U.S. inflation expectations, was somewhat reassuring, even if it remained elevated, and cemented expectations that the Federal Reserve would soften its monetary policy stance. In Europe, markets have sharply adjusted the ECB's path of policy rate cuts due to the recent financial turmoil. Among individual stocks, several companies rose sharply, notably Thales (+3.8%), Safran (+3.5%), Airbus (+3.4%), STMicroelectronics (+3.3%), Paris, France Banks (+3.1%), and Unibail Rodamco (+2.9%). Elsewhere, luxury stocks rose steadily, including Kering (+2.7%), Hermès (+2.6%), and LVMH (+2.4%), following strong results from Milan-based luxury shoemaker Tods. On the other hand, Eurofins Scientifique fell 2.6%. The FTSE MIB rose 2.4% in early trade to close at 26,800, after posting its biggest drop since June 2022 in the previous session, as concerns over the health of U.S. banks eased and sparked a rally in Milan's heavyweight financial sector. rebound. Major lenders UniCredit and Intesa Sanpaolo rose 4.2 percent and 3.4 percent, respectively, while major insurer Generali rose 3.6 percent after the company's results beat expectations. Temporary spillover relief also supported technology and commodity-related sectors. Meanwhile, investors digested U.S. inflation results for January, increasing speculation that the Federal Reserve will raise its fund's rate by 25 basis points at its next meeting. The IBEX 35 recovered from earlier losses on Tuesday to close up nearly 2.2% at 9159, trailing its European counterparts, as investors appreciated the latest US CPI report, which showed the Inflation has risen at a more moderate pace, bolstering bets on a slowdown or pause in rate hikes from the Federal Reserve. Financials also reduced their morning declines, with Banco Sabadell (+4.50%) and CaixaBank (+4.09%) in the lead. However, the biggest gains came from Melia Hotels (+4.65%). Domestically, CPI data from Spain showed that inflation was revised slightly to 6% in February from a preliminary 6.1%, but well above the ECB's 2% target.

London shares snapped three days of losses on Tuesday, with the benchmark FTSE 100 retreating from its lowest level in over two months to around 7,630, driven by industrials. Concerns about systemic risk in financial markets are starting to recede, with investors now expecting the threat of a financial crisis to force the Federal Reserve to ease monetary tightening. On the economic front, the UK unemployment rate held at 3.7% in the three months to January. Investors are now awaiting the new budget to be unveiled by Chancellor of the Exchequer Jeremy Hunt on Wednesday. Regarding individual share price movements, Rolls-Royce Holdings, and Ocado Group were the biggest gainers, rising about 7% and 4%, respectively.

The ruble-based MOEX Russia index extended early gains to close at 2,290 on Tuesday, up 0.9 percent, reversing losses from the previous session and moving closer to a five-month high hit last week, supported by banks and miners. At the same time, investors focused on company reports and possible dividend announcements. Gold miners posted sharp gains as U.S. bank failures fueled fears of a full-blown crisis and supported gold prices, with Polymetal shares up 1.8 percent ahead of Thursday's company results. Meanwhile, the financial sector rebounded from yesterday's minor correction, with shares in Sberbank rising 2.5% to their highest level since trading in Russia was suspended last year. Investors are betting heavily on a rebound in the financial sector this year, with the Economy Ministry's banking index up 12.3 percent so far this year after sanctions hit Russian banks and shut lenders out of the Western financial world.

On Tuesday, the Dow rose more than 300 points in early trading, while the S&P 500 and Nasdaq 100 gained about 2% as investors reacted positively to the latest U.S. inflation data. The Labor Department's CPI report showed monthly inflation rose 0.4% in February from January, in line with expectations, causing annual inflation to slow to 6%, the lowest since September 2021. Still, the same report showed core inflation beat expectations, underscoring a still-challenging macro environment. In addition, investors have been speculating that the Fed will soon be able to pause its tightening cycle as concerns mount over the health of the broader financial system following the collapse of SVB and the closure of Signature Bank. On the corporate front, regional bank stocks pared losses after several turmoils, with First Republic Bank surging 60%.

The Canada S&P/TSX Composite rose 0.8% to close around 19,750 on Tuesday, as concerns about a broader banking crisis in the U.S. eased and provided some respite for Canada's financial sector, compensating losses in the last few trading days. Heavyweight banks led gains in Toronto, with Royal Bank of Canada and TD Bank up more than 1 percent each, tracking positive momentum on Wall Street. Still, higher-than-expected core inflation in the U.S. limited the relief, underpinning bets for the Federal Reserve's 25 basis point rate hike next week. Meanwhile, energy producers recorded large losses as crude prices continued to slide. On the domestic data front, manufacturing sales in January were revised to show a monthly increase of 4.1%.
The Japan Nikkei 225 plunged 2.19% to close at 27,222 on Tuesday. In comparison, the broader Topix fell 2.67% to close at 1,948 on Tuesday, its third straight session of losses, as turmoil in the U.S. banking sector continued to ripple through global markets, leading to the decline in heavyweight banks. Investors also braced for key U.S. inflation data, which will be one of the last major economic reports considered by the Federal Reserve ahead of its policy meeting next week. Domestically, sentiment among Japan's big manufacturing firms fell sharply in the first quarter as high input costs and global economic uncertainty weighed heavily, data on Monday showed. Mitsubishi UFJ (-8.6%), Sumitomo Mitsui (-7.6%), and Mizuho Financial (-7.1%) led to losses in the financial sector. All other sectors were down, including index weights like Toyota Motor (-3%), Nippon Steel (-3.9%), SoftBank Group (-4.1%), Tokyo Electron (-2.1%), and Sony Group (-2.7%), share.

Hong Kong stocks tumbled 448.01 points, or 2.27%, to close at 19247.96 points, the lowest closing point since Dec. 7, 2022, retreating from Monday's sharp rebound as investors continued to bet on the biggest U.S. bank failure since 2008 response. Financials fell 3%, tracking Wall Street's S&P banking index, which fell 7% on Monday, its biggest one-day percentage drop since June 11, 2020. The Hang Seng Technology Index fell 2.6 percent, consumers fell 2.1 percent, and real estate fell 0.8 percent. News that Beijing will resume issuing visas to tourists and foreigners from March 15 failed to lift market sentiment, as traders cautiously anticipated the release of a slew of Chinese economic data for the first few months of 2023 on Wednesday. In the US, CPI data for February will be released later in the day, followed by PPI data the next day. Among individual stocks, AIA Group plunged 5.3%, followed by Xiaomi Inc (-4.9%), Kuaishou Technology (-4.7%), Meituan (-3.3%), JD.com (-2.8%), and Tencent Holdings. (-1.2%).

China Shanghai Composite Index fell 0.72% to close at 3,245 points, while the Shenzhen Stock Exchange constituent stocks fell 0.77% to close at 11,417 points, giving up the gains made in the previous trading day and following the decline of global peers. We remain cautious about other systemic risks. Investors also braced for key U.S. inflation data, which will be one of the last major economic reports considered by the Federal Reserve ahead of its policy meeting next week.

The India BSE Sensex fell 290 points to close at 57,955 on Tuesday, falling for a fourth straight session to its highest level in five months. The U.S. banking crisis remains a threat despite pledges by U.S. authorities to back all deposits beyond FDIC insurance limits. India's financial sector weighed. Bajaj Finance and Kotak Mahindra Bank fell more than 1.5 percent, leading to losses in the financial industry. Stocks were also pressured by domestic inflation data, which added to expectations that the RBI would raise interest rates by 25 basis points in April to extend its tightening momentum. India's retail prices rose 6.44% in February, above the central bank's 6% ceiling target for the second month. Policy-sensitive technology stocks fell sharply, with Mahindra & Mahindra and TCS down 2.8 percent and 2 percent, respectively. Wholesale prices slowed further, offering some respite.

New Zealand stocks fell 61.76 points, or 0.53%, to close at 11611.14 on Tuesday, the lowest closing level in nearly 3-1/2 months, as the reassurance of US authorities after the collapse of Silicon Valley Bank (SVB) did not appear to be enough to calm the market. Stocks on Wall Street were mixed on Monday, with the ANZ 50 down for a second straight session, ahead of U.S. CPI and PPI data for February due later on Tuesday and Wednesday. Meanwhile, according to Bloomberg News, yields on policy-sensitive two-year government bonds in New Zealand plunged about 25 basis points, as did yields on three-year Australian bonds. Falling across the board, financials remained under pressure, mirroring a plunge in Wall Street banks. Ikegps Group fell 4.4 percent as the digital measurement tools provider had $3.2 million exposure to SVB. Honey exporter Comvita Ltd. fell 2.4% after it said its U.S. skincare joint venture, Caravan Honey, was a client of the failed bank with $2.5 million in deposits.

 

REVIEWING THE LAST ECONOMIC DATA:

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

- CA: Canadian manufacturing sales rose 4.1% month-on-month in January 2023, compared to the initial estimate of a 3.9% increase after falling 2.1% in the previous month. It was the strongest increase in manufacturing sales since last February, with gains in 16 of 21 industries. Petroleum and coal products (+10.1%), automotive (+11.4%), and food (+3.4%) were the top gainers, while aerospace products and components (-11.2%), chemicals (-2.8%) and wood (- 4.9%) the largest decline in the industry.

- US: U.S. energy costs rose 5.2% year-over-year in February 2023, down from 8.7% in the previous month. This is the lowest reading since February 2021, supported by lower gasoline prices (-2% vs. 1.5% in January) and sharp slowdowns in fuel oil (9.2% vs. 27.7%) and natural gas (14.3% vs. 26.7%). On the other hand, electricity costs rose (12.9% vs. 11.9%).

- US: U.S. food prices rose 9.5% year-over-year in February 2023, slowing from 10.1% in January to 11.4% in August last year. This was the lowest reading since April 2022, as domestic food prices eased further (10.1% vs. 11.1% in January) while foreign food prices accelerated (8.4% vs. 8.2%).

- US: In February 2023, the US CPI rose by 0.4% month-on-month, down from 0.5% in January, in line with market forecasts. The housing index was the largest contributor (0.8% vs. 0.7% in January). Still, other upward pressure came from food prices (0.4% vs. 0.5%), entertainment (0.9%), home furniture and operations (0.8%), and air tickets. Energy prices fell 0.6%, natural gas (-8%, largest drop since October 2006) and fuel oil (-7.9%) both fell, and gasoline prices rose 1%. Elsewhere, the used cars and trucks index fell 2.8%, extending a recent downward trend. Excluding food and energy, core CPI rose 0.5%, the biggest gain since September, compared with a 0.4% increase forecast.

- US: The U.S. NFIB Small Business Optimism Index rose to 90.9 in February 2023 from 90.3 in January, the highest in three months, even as companies face difficulties finding workers. Forty-seven percent of homeowners said job openings were hard to fill, up 2 points from January, and 28 percent said inflation was their most important concern, also up 2 points. On the other hand, about 38 percent of homeowners reported an increase in average selling price, down four percentage points from January.

- US: In February 2023, U.S. core consumer prices, which exclude volatile goods such as food and energy, rose 0.5% from the previous month after increasing 0.4% in January and beating market expectations of 0.4%. Categories added in February included housing, entertainment, home furnishings and operations, and air tickets. Indexes for used cars and trucks and health care declined for the month. In line with forecasts, core consumer prices rose 5.5% yearly.

- IT: In January 2023, industrial production in Italy fell by 0.7% from a month earlier, beating expectations for a 0.1% contraction and marking the fourth monthly contraction since September 2022, from a downwardly revised 1.2% in December 2022. % growth fell back. The output of capital goods contracted 2% after rising 3.3% the previous month, while prthe oduction of intermediate goods expanded 0.6% from the last month. Looking at various industries, the production of pharmaceutical products (-6.1%), machinery and equipment manufacturing (-4.7%), transport equipment (-3.3%), and textiles (-2.7%) shrank sharply. On the other hand, growth in coke and refined gasoline products (5%) and extractive industries (4%) limited the industrial decline. As a result, industrial production grew by 1.4% year-on-year.

- HK: In the fourth quarter of 2022, Hong Kong's manufacturing production fell by 0.1% year-on-year, following a revised 0.5% decline in the previous quarter. It was the second consecutive quarter of contraction. Still, at a slower pace com last the previous quarter, as textiles and apparel (-5.1% in Q3 vs. -4.6%) and paper products, printing, and recording media reproduction ( -2.3% vs. -0.6%) yields fell further. In addition, production of metals, computers, electronic and optical products, machinery and equipment (-1.5% vs. -2.3%), food, beverages, and tobacco (-0.3% vs. -1%) decreased less. In contrast, output in miscellaneous manufacturing rose (1.2% vs. 1%). As a result, for all of 2022, manufacturing production rose 0.2%, down from 5.5% growth in 2021.

- UK: U.K. shares opened lower on Tuesday, with global shares falling as a Silicon Valley bank's collapse continued reverberating through financial markets. Investors also braced for key U.S. inflation data, which will be one of the last major economic reports considered by the Federal Reserve ahead of its policy meeting next week. Domestically, traders digested data showing that the UK unemployment rate was 3.7% in January, despite expectations for a slight increase to 3.8%. FTSE 100 futures were down 0.2% in pre-market trade.

- UK: Employment in the UK rose by 65,000 in the three months to January 2023, well above market forecasts for a rise of 52,000 and from 74,000 in the previous month. Part-time workers rose in the most recent three-month period, while full-time workers fell but remained above pre-pandemic levels. In addition, the number of full-time and part-time self-employed persons has increased.

- UK: The unemployment rate in the UK for November 2022-January 2023 will be 3.7%, essentially unchanged from the previous three months and slightly below the market consensus of 3.8%. It was also 0.3 percentage points below pre-pandemic levels. Unemployment rose by 5,000 to 1.25 million, driven by part-time employees and the self-employed, while employment increased by 6,500 to 32.84 million. Total wages grew 5.7 percent year-on-year in the three months to January, while real wages fell 3.2 percent, the biggest drop since February-April 2009.

- UK: Average weekly earnings, including UK bonuses, rose 5.7% year-on-year to £630 in the three months to January 2023, the smallest increase since July, after a 6% rise in the final three months of 2022. Meanwhile, fixed pay, excluding bonuses, rose 6.5% to £589, slowing for the first time since late 2021 after hitting an all-time high of 6.7% in the period barring the outbreak. Average wage growth was 7% in the private sector and 4.8% in the public sector. However, when adjusted for inflation, total wages fell by 3.2%, the most since 2009, and regular wages fell by 2.4%, as high inflation continued to squeeze living standards in the UK.

- AU: The Westpac-Melbourne Institute Australian Consumer Confidence Index for March 2023 was unchanged at 78.5, remaining near record lows as high inflation, rising interest rates, and economic uncertainty persists. It also marked the second month in a row of readings below 80, a figure that has followed only two other dismal periods. One emerging area of particular concern is the outlook for sales of staple household goods. The "time to buy major household goods" sub-index fell 4% to 74.9 in March, following a 10% decline the previous month. The index's components showed a deterioration in expectations for household finances, the economy, and assessments of whether now is a good time to buy major household items in the year ahead. Reviews of financial conditions improved compared with a year ago, but from a very weak start, and expectations for the economy over the next five years have improved sharply. The net effect is to keep sentiment overall unchanged.

- AU: Australia's NAB Business Confidence Index fell 10 points to -4 in February 2023, its lowest level since November last year and below its long-term average amid high inflation and soaring borrowing costs. Wholesale, entertainment, personal services, financials, commerce, and real estate drove the decline. Meanwhile, business conditions remained stable (17 vs. 18 in January). Sales (27) and employment (12) both held steady. At the same time, profitability fell (14 vs. 18). In terms of industries, the retail sector has grown significantly, while the financial, commercial, and real estate industries have experienced relatively small growth. At the same time, capacity utilization also fell due to a decline in forward orders (3 to 6) but remained at 85.2%, leading indicators to decline slightly. NAB Chief Economist Alan Oster said: "Overall, the survey confirms the continued resilience of the economy, although we continue to expect stronger demand growth later in the year when the full impact of higher interest rates has passed. Significant slowdown."

- SK: South Korean import prices fell 0.5% year-on-year in February 2023, moderating from a 1.9% increase in the previous month. It was the first annual drop in import costs since February 2021 and the biggest since January 2021 due to lower oil prices and a stronger Korean win. The main downward pressure came from raw materials (-1.4% YoY in January, down 5.4% YoY), followed by intermediate products (-1.1%, down 0.4% YoY). On the other hand, prices of capital goods (3.2%, down 2.5% yoy) and consumer goods (1.9%, down 0.3% yoy) rose. As a result, import prices rose 2.1 percent month-on-month in February, following three straight months of price falls.

- SK: In February 2023, South Korea's export prices fell by 2.7% year-on-year after rising by 1.2% in the previous month. This was the largest annual drop in export prices since December 2020, driven by a stronger Korean won, agricultural, forestry, and marine products (down 1.9% year-on-year, down 0.2% in January) and manufactured goods (down 2.7% year-on-year, down 0.2% year-on-year). 1.2%) to further reduce the cost. In February 2023, export prices increased by 0.7% month-on-month after falling by 2.9% in the previous month.

- ND: The Netherlands' annual inflation rate was confirmed at 8% in February 2023, up from an 11-month low of 7.6% in January. The main upward pressures came from food, which climbed to an all-time high of 17.9% (vs. 17.3% in January) due to the high cost of fresh vegetables, clothing, and footwear (11% versus 9.6% ). In addition, prices rose fastest for housing and utilities (4.8% vs. 4.5%), recreation and culture (6.1% vs. 5.4%), and restaurants and hotels (10% vs. 8.8 %). On the other hand, transport slowed down above all (3.6% vs. 5.3%) due to the lower fuel cost. As a result, core inflation, which excludes energy, food, alcohol, and tobacco, rose to a new record 6.7% from 6.4% the previous month. In addition, the harmonized CPI used to compare prices with other EU member states rose to 8.9% from 8.4%. Every month, consumer prices increased by 1%.

 

LOOKING AHEAD:

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

- GBP: CPI y/y, Core CPI y/y, PPI Input m/m, PPI Output m/m, RPI y/y, HPI y/y, and Visitor Arrivals m/m.

- JPY: Tertiary Industry Activity m/m.

- USD: Core Retail Sales m/m, Empire State Manufacturing Index, Retail Sales m/m, Capacity Utilization Rate, Industrial Production m/m, Business Inventories m/m, NAHB Housing Market Index, Crude Oil Inventories, and TIC Long-Term Purchases.

- EUR: Industrial Production m/m, Trade Balance, German 30-y Bond Auction, and ECB President Lagarde Speaks.

- CAD: Housing Starts, Manufacturing Sales m/m, and Wholesale Sales m/m.

- AUD: RBA Gov Lowe Speaks.

- NZD: Visitor Arrivals m/m.

 

KEY EQUITY & BOND MARKET DRIVERS:

Кey factors in the stock and bond market are currently:

- US: The U.S. 10-year Treasury yield topped the 3.6% mark on Tuesday after falling to a five-week low of 3.51% in the previous session, as investors digested the latest inflation data, while instability in the U.S. banking system continued to underpin concerns about safer markets—Demand for government bonds. U.S. consumer prices rose an annual average of 6% in February, slowing for the eighth month and in line with market expectations. Still, rising housing costs pushed core consumer prices up 0.5 percent from the previous month, more than expected, underscoring inflationary pressures in the economy. In addition, investors widely expect the Fed to raise its fund's rate by 25 basis points at its next meeting, down from a previous bet of 50 basis points, swap prices showed, as the closure of major U.S. banks threatens the financial stability of the U.S. economy, despite authorities All deposits are guaranteed to be safe.

- US: Stock futures contracts tied to the three major indexes rose nearly 1% on Tuesday, with Wall Street poised to open higher as investors reacted to the latest U.S. inflation data. The Labor Department's CPI report showed monthly inflation rose 0.4% in February from January, in line with expectations, causing annual inflation to slow to 6%, the lowest since September 2021. Still, the same report showed core inflation beat expectations, underscoring a still-challenging macro environment. In addition, investors have been speculating that the Fed will soon be able to pause its tightening cycle as concerns mount over the health of the broader financial system following the collapse of SVB and the closure of Signature Bank. Meanwhile, regional bank stocks rallied in premarket trading, with First Republic Bank surging nearly 60%.

- UK: U.K. 10-year gilt yields held below 3.4 percent, hovering near their lowest level since Feb. 10, as investors sought safety amid worries about the U.S. banking system and uncertainty over U.S. monetary policy. Investors worried that the collapse of Silicon Valley Bank could ripple through the entire banking system while assessing the possibility that the Federal Reserve will not control interest rates at its March policy meeting. 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. On the data front, wage growth in the UK slowed in the three months to January, with gross wages and fixed pay rising by 5.7% and 6.5%, respectively, down from 6% and 6.7% in the previous period. Investors are now awaiting the new budget to be unveiled by Chancellor of the Exchequer Jeremy Hunt on Wednesday.

- CH: The yield on the 10-year Swiss government bond was at 1.2%, slightly above the five-week low of 1.15%, as investors assessed threats to the stability of European banks after the closure of US lenders triggered a flight to the safety of government bonds. Meanwhile, Swiss National Bank officials continued to warn that inflation in the country remained too high and risks of second-round sticky persisted. While traders generally expect the SNB to raise its key interest rate by 50 basis points next week, economists have not completely discounted a more aggressive 75 basis point hike. Consumer prices in Switzerland rose 3.4% annually in February, well above market expectations of a 3.1% increase and SNB forecasts of 3%.

 

LEADING MARKET SECTORS:

- Strong sectors: Financials, Communication Services, Materials, Information Technology.

- Weak sectors: Real Estate, Energy.

 

TOP CURRENCY & COMMODITIES MARKET DRIVERS: 

Кey factors in the currency and commodities market are currently:

- USD: The U.S. dollar index rose to 103.95 on Tuesday after falling nearly 1% in the previous session. Investors tried to gauge the next step of monetary policy after the collapse of Silicon Valley banks and another slowdown in inflation. U.S. inflation fell to 6% in February, the lowest since September 2021, in line with expectations, the latest data showed. As a result, compared with the previous week, money markets are now pricing in a 31 percent chance that the Fed will keep rates on hold next week, with a rate cut expected as early as June until the end of the year.

- WTI: WTI crude oil futures fell 5% to around $71 a barrel on Tuesday, closing at its lowest level since December 2021, as concerns over the health of the broader financial system continued to hang over the market. The collapse of New York-based Silicon Valley Bank and Signature Bank triggered worries about risks to other banks stemming from the Federal Reserve's sharpest rate-hiking cycle since the early 1980s. However, hopes of a recovery in Chinese demand and a weaker dollar were kept low under prices. In its March report, OPEC forecasted higher oil demand from China, the world's largest oil importer, in 2023. Estimates for average global supply have remained unchanged, although uncertainties remain about the impact of developments in geopolitical debates and US shale production potential in 2023.

- OIL: Brent crude futures fell nearly 5% to around $77 a barrel on Tuesday, extending a 2.4% loss in the prior session as the Silicon Valley Bank collapse raised concerns about a broader financial and economic crisis. They were triggering a sell-off in risky assets. Meanwhile, hopes of a recovery in Chinese demand and a weaker dollar were kept low under prices. In its March report, OPEC revised its forecast for the Chinese market for 2023, maintaining its forecast for global oil demand growth unchanged. Estimates for average global supply have also remained broadly unchanged, although uncertainties remain about the impact of ongoing geopolitical developments and the production potential of US shale in 2023. inventories.

- SLV: Silver futures were above $21.7 an ounce, maintaining a sharp rebound from the four-month low of $20 they hit on March 8 as investors digested the latest price data and continued to assess the volatility of the US banking sector for clues about the Federal Reserve's tightening path in the coming months. While the US CPI aligned with expectations, rising housing costs lifted the core reading to a warmer-than-expected 0.5% in February, underscoring inflationary pressure. However, high demand for safe assets supported bullion prices after the closure of major US banks threatened global financial stability. Also, fears that other banks could fail due to high borrowing costs have tempered expectations about how high the Federal Reserve could hike rates. Tight supply also aided the rebound, with LBMA and COMEX inventories remaining low.

- GLD: Gold prices moved slightly around the $1908 an ounce level on Tuesday, near high levels not seen since early February, as investors digest the latest US CPI report, adjust their expectations of monetary tightening, and worries about the collapse of SVB and Signature Bank and the news that Credit Suisse found "substantial weaknesses" in its reports continue to raise fears of contagion to other banks, leading to an aversion to the risk. The US inflation rate slowed as expected, but the headline monthly rate accelerated, a sign that inflationary pressures remain high. As a result, most investors expect a 25-basis point rate hike from the Fed next week. Week. Meanwhile, the ECB raised rates by 25 or 50 basis points.

- GAS: U.S. natural gas futures rose for a second straight day on Tuesday, trading above $2.6/MMBtu, further away from the near-3-week low of $2.4 in the previous session, thanks to surging LNG exports and the increase in demand. The total amount of gas flowing to the seven largest U.S. LNG export facilities had increased so far to 11.1 billion cubic feet in March 2023 from 12.8 billion cubic feet in February, breaking a monthly record of 12.9 billion cubic feet achieved in March 2022 when the Freeport plant returned to service following the fire-related shutdown in June 2022. Meanwhile, average U.S. gas demand, including exports, is expected to rise to 120.4 bcf next week from 119.8 bcf this week, above forecasts from Refinitiv on Friday. On the other hand, average gas production in the lower 48 US states grew to 98.8 billion cubic feet this month, up from 98.2 billion cubic feet in the prior period.

 

CHART OF THE DAY:

Sterling held above $1.21, hovering at its highest level since Feb. 21 and holding above 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. On the data front, UK wage growth slowed in the three months to January, and the Bank of England is watching closely to decide when to stop raising interest rates. Total compensation rose 5.7 percent year-over-year, down from 6.0 percent in the prior period, while payment excluding bonuses rose 6.5 percent from 6.7 percent. Investors are now awaiting the new budget to be unveiled by the Chancellor of the Exchequer Hunt on Wednesday.

 

 

 

 

 

Long-term Channels Trading Strategy: - GBPUSD-; Chart with time-frame (D1); The primary Resistance with a potential (target area) is around ~ ( 1.221 & 1.232 ),  and the direct Support with a prospect (consolidation area) is everywhere ~ ( 1.189 ).  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) The Baltic Exchange's leading shipping index, which measures the cost of shipping goods worldwide, edged up for the 18th consecutive session on Tuesday, climbing about 8.3% to its highest level since December 22 at 1,587 points, as demand remained strong across all vessel segments. The capesize index, which tracks iron ore and coal cargoes of 150,000 tons, rose for the 17th consecutive day, jumping 15.9% to a more than 11-week high of 2,110 points; and the Panamax index, which tracks cargoes of coal or grain from about 60,000 tons to 70,000 tons, rose 3.8% to a more than the four-month high of 1,743 points. Among smaller vessels, the supramax index increased by 28 points to 1,263 points. European shares rebounded from a two-day sell-off on Tuesday, with the benchmark Stoxx 600 gaining 1.7% after plunging 2.4% in the previous session, with the banking sector recovering more than 2.5% from its worst day in a year. Domestically, Germany's DAX gained 1.9% after falling 3% on Monday, with Deutsche Bank and Commerzbank each up more than 4%. Elsewhere, HSBC rose about 1.5 percent after the bank said it planned to inject 2 billion pounds of liquidity into SVB's UK unit. In other corporate headlines, shoemaker Tod's, insurer Generali and airport operator Flughafen Zurich rose after their latest earnings reports. Investors hoped that U.S. policymakers might take a less aggressive approach to monetary policy after Silicon Valley banks collapsed and U.S. inflation slowed again. The latest data showed that U.S. inflation fell to 6% in February, the lowest since September 2021. On Tuesday, the CAC 40 index rose to close at 7,142 points, or about 1.9%, on its worst day of the year, ending a five-day losing streak. The rise, broadly in line with U.S. inflation expectations, was somewhat reassuring, even if it remained elevated, and cemented expectations that the Federal Reserve would soften its monetary policy stance. In Europe, markets have sharply adjusted the ECB's path of policy rate cuts due to the recent financial turmoil. Among individual stocks, several companies rose sharply, notably Thales (+3.8%), Safran (+3.5%), Airbus (+3.4%), STMicroelectronics (+3.3%), Paris, France Banks (+3.1%), and Unibail Rodamco (+2.9%). Elsewhere, luxury stocks rose steadily, including Kering (+2.7%), Hermès (+2.6%), and LVMH (+2.4%), following strong results from Milan-based luxury shoemaker Tods. On the other hand, Eurofins Scientifique fell 2.6%. The FTSE MIB rose 2.4% in early trade to close at 26,800, after posting its biggest drop since June 2022 in the previous session, as concerns over the health of U.S. banks eased and sparked a rally in Milan's heavyweight financial sector. rebound. Major lenders UniCredit and Intesa Sanpaolo rose 4.2 percent and 3.4 percent, respectively, while major insurer Generali rose 3.6 percent after the company's results beat expectations. Temporary spillover relief also supported technology and commodity-related sectors. Meanwhile, investors digested U.S. inflation results for January, increasing speculation that the Federal Reserve will raise its fund's rate by 25 basis points at its next meeting. The IBEX 35 recovered from earlier losses on Tuesday to close up nearly 2.2% at 9159, trailing its European counterparts, as investors appreciated the latest US CPI report, which showed the Inflation has risen at a more moderate pace, bolstering bets on a slowdown or pause in rate hikes from the Federal Reserve. Financials also reduced their morning declines, with Banco Sabadell (+4.50%) and CaixaBank (+4.09%) in the lead. However, the biggest gains came from Melia Hotels (+4.65%). Domestically, CPI data from Spain showed that inflation was revised slightly to 6% in February from a preliminary 6.1%, but well above the ECB's 2% target. London shares snapped three days of losses on Tuesday, with the benchmark FTSE 100 retreating from its lowest level in over two months to around 7,630, driven by industrials. Concerns about systemic risk in financial markets are starting to recede, with investors now expecting the threat of a financial crisis to force the Federal Reserve to ease monetary tightening. On the economic front, the UK unemployment rate held at 3.7% in the three months to January. Investors are now awaiting the new budget to be unveiled by Chancellor of the Exchequer Jeremy Hunt on Wednesday. Regarding individual share price movements, Rolls-Royce Holdings, and Ocado Group were the biggest gainers, rising about 7% and 4%, respectively. The ruble-based MOEX Russia index extended early gains to close at 2,290 on Tuesday, up 0.9 percent, reversing losses from the previous session and moving closer to a five-month high hit last week, supported by banks and miners. At the same time, investors focused on company reports and possible dividend announcements. Gold miners posted sharp gains as U.S. bank failures fueled fears of a full-blown crisis and supported gold prices, with Polymetal shares up 1.8 percent ahead of Thursday's company results. Meanwhile, the financial sector rebounded from yesterday's minor correction, with shares in Sberbank rising 2.5% to their highest level since trading in Russia was suspended last year. Investors are betting heavily on a rebound in the financial sector this year, with the Economy Ministry's banking index up 12.3 percent so far this year after sanctions hit Russian banks and shut lenders out of the Western financial world. On Tuesday, the Dow rose more than 300 points in early trading, while the S&P 500 and Nasdaq 100 gained about 2% as investors reacted positively to the latest U.S. inflation data. The Labor Department's CPI report showed monthly inflation rose 0.4% in February from January, in line with expectations, causing annual inflation to slow to 6%, the lowest since September 2021. Still, the same report showed core inflation beat expectations, underscoring a still-challenging macro environment. In addition, investors have been speculating that the Fed will soon be able to pause its tightening cycle as concerns mount over the health of the broader financial system following the collapse of SVB and the closure of Signature Bank. On the corporate front, regional bank stocks pared losses after several turmoils, with First Republic Bank surging 60%. The Canada S&P/TSX Composite rose 0.8% to close around 19,750 on Tuesday, as concerns about a broader banking crisis in the U.S. eased and provided some respite for Canada's financial sector, compensating losses in the last few trading days. Heavyweight banks led gains in Toronto, with Royal Bank of Canada and TD Bank up more than 1 percent each, tracking positive momentum on Wall Street. Still, higher-than-expected core inflation in the U.S. limited the relief, underpinning bets for the Federal Reserve's 25 basis point rate hike next week. Meanwhile, energy producers recorded large losses as crude prices continued to slide. On the domestic data front, manufacturing sales in January were revised to show a monthly increase of 4.1%. The Japan Nikkei 225 plunged 2.19% to close at 27,222 on Tuesday. In comparison, the broader Topix fell 2.67% to close at 1,948 on Tuesday, its third straight session of losses, as turmoil in the U.S. banking sector continued to ripple through global markets, leading to the decline in heavyweight banks. Investors also braced for key U.S. inflation data, which will be one of the last major economic reports considered by the Federal Reserve ahead of its policy meeting next week. Domestically, sentiment among Japan's big manufacturing firms fell sharply in the first quarter as high input costs and global economic uncertainty weighed heavily, data on Monday showed. Mitsubishi UFJ (-8.6%), Sumitomo Mitsui (-7.6%), and Mizuho Financial (-7.1%) led to losses in the financial sector. All other sectors were down, including index weights like Toyota Motor (-3%), Nippon Steel (-3.9%), SoftBank Group (-4.1%), Tokyo Electron (-2.1%), and Sony Group (-2.7%), share. Hong Kong stocks tumbled 448.01 points, or 2.27%, to close at 19247.96 points, the lowest closing point since Dec. 7, 2022, retreating from Monday's sharp rebound as investors continued to bet on the biggest U.S. bank failure since 2008 response. Financials fell 3%, tracking Wall Street's S&P banking index, which fell 7% on Monday, its biggest one-day percentage drop since June 11, 2020. The Hang Seng Technology Index fell 2.6 percent, consumers fell 2.1 percent, and real estate fell 0.8 percent. News that Beijing will resume issuing visas to tourists and foreigners from March 15 failed to lift market sentiment, as traders cautiously anticipated the release of a slew of Chinese economic data for the first few months of 2023 on Wednesday. In the US, CPI data for February will be released later in the day, followed by PPI data the next day. Among individual stocks, AIA Group plunged 5.3%, followed by Xiaomi Inc (-4.9%), Kuaishou Technology (-4.7%), Meituan (-3.3%), JD.com (-2.8%), and Tencent Holdings. (-1.2%). China Shanghai Composite Index fell 0.72% to close at 3,245 points, while the Shenzhen Stock Exchange constituent stocks fell 0.77% to close at 11,417 points, giving up the gains made in the previous trading day and following the decline of global peers. We remain cautious about other systemic risks. Investors also braced for key U.S. inflation data, which will be one of the last major economic reports considered by the Federal Reserve ahead of its policy meeting next week. The India BSE Sensex fell 290 points to close at 57,955 on Tuesday, falling for a fourth straight session to its highest level in five months. The U.S. banking crisis remains a threat despite pledges by U.S. authorities to back all deposits beyond FDIC insurance limits. India's financial sector weighed. Bajaj Finance and Kotak Mahindra Bank fell more than 1.5 percent, leading to losses in the financial industry. Stocks were also pressured by domestic inflation data, which added to expectations that the RBI would raise interest rates by 25 basis points in April to extend its tightening momentum. India's retail prices rose 6.44% in February, above the central bank's 6% ceiling target for the second month. Policy-sensitive technology stocks fell sharply, with Mahindra & Mahindra and TCS down 2.8 percent and 2 percent, respectively. Wholesale prices slowed further, offering some respite. New Zealand stocks fell 61.76 points, or 0.53%, to close at 11611.14 on Tuesday, the lowest closing level in nearly 3-1/2 months, as the reassurance of US authorities after the collapse of Silicon Valley Bank (SVB) did not appear to be enough to calm the market. Stocks on Wall Street were mixed on Monday, with the ANZ 50 down for a second straight session, ahead of U.S. CPI and PPI data for February due later on Tuesday and Wednesday. Meanwhile, according to Bloomberg News, yields on policy-sensitive two-year government bonds in New Zealand plunged about 25 basis points, as did yields on three-year Australian bonds. Falling across the board, financials remained under pressure, mirroring a plunge in Wall Street banks. Ikegps Group fell 4.4 percent as the digital measurement tools provider had $3.2 million exposure to SVB. Honey exporter Comvita Ltd. fell 2.4% after it said its U.S. skincare joint venture, Caravan Honey, was a client of the failed bank with $2.5 million in deposits.   REVIEWING THE LAST ECONOMIC DATA: Reviewing the latest economic  news, the most critical data is: - CA: Canadian manufacturing sales rose 4.1% month-on-month in January 2023, compared to the initial estimate of a 3.9% increase after falling 2.1% in the previous month. It was the strongest increase in manufacturing sales since last February, with gains in 16 of 21 industries. Petroleum and coal products (+10.1%), automotive (+11.4%), and food (+3.4%) were the top gainers, while aerospace products and components (-11.2%), chemicals (-2.8%) and wood (- 4.9%) the largest decline in the industry. - US: U.S. energy costs rose 5.2% year-over-year in February 2023, down from 8.7% in the previous month. This is the lowest reading since February 2021, supported by lower gasoline prices (-2% vs. 1.5% in January) and sharp slowdowns in fuel oil (9.2% vs. 27.7%) and natural gas (14.3% vs. 26.7%). On the other hand, electricity costs rose (12.9% vs. 11.9%). - US: U.S. food prices rose 9.5% year-over-year in February 2023, slowing from 10.1% in January to 11.4% in August last year. This was the lowest reading since April 2022, as domestic food prices eased further (10.1% vs. 11.1% in January) while foreign food prices accelerated (8.4% vs. 8.2%). - US: In February 2023, the US CPI rose by 0.4% month-on-month, down from 0.5% in January, in line with market forecasts. The housing index was the largest contributor (0.8% vs. 0.7% in January). Still, other upward pressure came from food prices (0.4% vs. 0.5%), entertainment (0.9%), home furniture and operations (0.8%), and air tickets. Energy prices fell 0.6%, natural gas (-8%, largest drop since October 2006) and fuel oil (-7.9%) both fell, and gasoline prices rose 1%. Elsewhere, the used cars and trucks index fell 2.8%, extending a recent downward trend. Excluding food and energy, core CPI rose 0.5%, the biggest gain since September, compared with a 0.4% increase forecast. - US: The U.S. NFIB Small Business Optimism Index rose to 90.9 in February 2023 from 90.3 in January, the highest in three months, even as companies face difficulties finding workers. Forty-seven percent of homeowners said job openings were hard to fill, up 2 points from January, and 28 percent said inflation was their most important concern, also up 2 points. On the other hand, about 38 percent of homeowners reported an increase in average selling price, down four percentage points from January. - US: In February 2023, U.S. core consumer prices, which exclude volatile goods such as food and energy, rose 0.5% from the previous month after increasing 0.4% in January and beating market expectations of 0.4%. Categories added in February included housing, entertainment, home furnishings and operations, and air tickets. Indexes for used cars and trucks and health care declined for the month. In line with forecasts, core consumer prices rose 5.5% yearly. - IT: In January 2023, industrial production in Italy fell by 0.7% from a month earlier, beating expectations for a 0.1% contraction and marking the fourth monthly contraction since September 2022, from a downwardly revised 1.2% in December 2022. % growth fell back. The output of capital goods contracted 2% after rising 3.3% the previous month, while prthe oduction of intermediate goods expanded 0.6% from the last month. Looking at various industries, the production of pharmaceutical products (-6.1%), machinery and equipment manufacturing (-4.7%), transport equipment (-3.3%), and textiles (-2.7%) shrank sharply. On the other hand, growth in coke and refined gasoline products (5%) and extractive industries (4%) limited the industrial decline. As a result, industrial production grew by 1.4% year-on-year. - HK: In the fourth quarter of 2022, Hong Kong's manufacturing production fell by 0.1% year-on-year, following a revised 0.5% decline in the previous quarter. It was the second consecutive quarter of contraction. Still, at a slower pace com last the previous quarter, as textiles and apparel (-5.1% in Q3 vs. -4.6%) and paper products, printing, and recording media reproduction ( -2.3% vs. -0.6%) yields fell further. In addition, production of metals, computers, electronic and optical products, machinery and equipment (-1.5% vs. -2.3%), food, beverages, and tobacco (-0.3% vs. -1%) decreased less. In contrast, output in miscellaneous manufacturing rose (1.2% vs. 1%). As a result, for all of 2022, manufacturing production rose 0.2%, down from 5.5% growth in 2021. - UK: U.K. shares opened lower on Tuesday, with global shares falling as a Silicon Valley bank's collapse continued reverberating through financial markets. Investors also braced for key U.S. inflation data, which will be one of the last major economic reports considered by the Federal Reserve ahead of its policy meeting next week. Domestically, traders digested data showing that the UK unemployment rate was 3.7% in January, despite expectations for a slight increase to 3.8%. FTSE 100 futures were down 0.2% in pre-market trade. - UK: Employment in the UK rose by 65,000 in the three months to January 2023, well above market forecasts for a rise of 52,000 and from 74,000 in the previous month. Part-time workers rose in the most recent three-month period, while full-time workers fell but remained above pre-pandemic levels. In addition, the number of full-time and part-time self-employed persons has increased. - UK: The unemployment rate in the UK for November 2022-January 2023 will be 3.7%, essentially unchanged from the previous three months and slightly below the market consensus of 3.8%. It was also 0.3 percentage points below pre-pandemic levels. Unemployment rose by 5,000 to 1.25 million, driven by part-time employees and the self-employed, while employment increased by 6,500 to 32.84 million. Total wages grew 5.7 percent year-on-year in the three months to January, while real wages fell 3.2 percent, the biggest drop since February-April 2009. - UK: Average weekly earnings, including UK bonuses, rose 5.7% year-on-year to £630 in the three months to January 2023, the smallest increase since July, after a 6% rise in the final three months of 2022. Meanwhile, fixed pay, excluding bonuses, rose 6.5% to £589, slowing for the first time since late 2021 after hitting an all-time high of 6.7% in the period barring the outbreak. Average wage growth was 7% in the private sector and 4.8% in the public sector. However, when adjusted for inflation, total wages fell by 3.2%, the most since 2009, and regular wages fell by 2.4%, as high inflation continued to squeeze living standards in the UK. - AU: The Westpac-Melbourne Institute Australian Consumer Confidence Index for March 2023 was unchanged at 78.5, remaining near record lows as high inflation, rising interest rates, and economic uncertainty persists. It also marked the second month in a row of readings below 80, a figure that has followed only two other dismal periods. One emerging area of particular concern is the outlook for sales of staple household goods. The "time to buy major household goods" sub-index fell 4% to 74.9 in March, following a 10% decline the previous month. The index's components showed a deterioration in expectations for household finances, the economy, and assessments of whether now is a good time to buy major household items in the year ahead. Reviews of financial conditions improved compared with a year ago, but from a very weak start, and expectations for the economy over the next five years have improved sharply. The net effect is to keep sentiment overall unchanged. - AU: Australia's NAB Business Confidence Index fell 10 points to -4 in February 2023, its lowest level since November last year and below its long-term average amid high inflation and soaring borrowing costs. Wholesale, entertainment, personal services, financials, commerce, and real estate drove the decline. Meanwhile, business conditions remained stable (17 vs. 18 in January). Sales (27) and employment (12) both held steady. At the same time, profitability fell (14 vs. 18). In terms of industries, the retail sector has grown significantly, while the financial, commercial, and real estate industries have experienced relatively small growth. At the same time, capacity utilization also fell due to a decline in forward orders (3 to 6) but remained at 85.2%, leading indicators to decline slightly. NAB Chief Economist Alan Oster said: "Overall, the survey confirms the continued resilience of the economy, although we continue to expect stronger demand growth later in the year when the full impact of higher interest rates has passed. Significant slowdown." - SK: South Korean import prices fell 0.5% year-on-year in February 2023, moderating from a 1.9% increase in the previous month. It was the first annual drop in import costs since February 2021 and the biggest since January 2021 due to lower oil prices and a stronger Korean win. The main downward pressure came from raw materials (-1.4% YoY in January, down 5.4% YoY), followed by intermediate products (-1.1%, down 0.4% YoY). On the other hand, prices of capital goods (3.2%, down 2.5% yoy) and consumer goods (1.9%, down 0.3% yoy) rose. As a result, import prices rose 2.1 percent month-on-month in February, following three straight months of price falls. - SK: In February 2023, South Korea's export prices fell by 2.7% year-on-year after rising by 1.2% in the previous month. This was the largest annual drop in export prices since December 2020, driven by a stronger Korean won, agricultural, forestry, and marine products (down 1.9% year-on-year, down 0.2% in January) and manufactured goods (down 2.7% year-on-year, down 0.2% year-on-year). 1.2%) to further reduce the cost. In February 2023, export prices increased by 0.7% month-on-month after falling by 2.9% in the previous month. - ND: The Netherlands' annual inflation rate was confirmed at 8% in February 2023, up from an 11-month low of 7.6% in January. The main upward pressures came from food, which climbed to an all-time high of 17.9% (vs. 17.3% in January) due to the high cost of fresh vegetables, clothing, and footwear (11% versus 9.6% ). In addition, prices rose fastest for housing and utilities (4.8% vs. 4.5%), recreation and culture (6.1% vs. 5.4%), and restaurants and hotels (10% vs. 8.8 %). On the other hand, transport slowed down above all (3.6% vs. 5.3%) due to the lower fuel cost. As a result, core inflation, which excludes energy, food, alcohol, and tobacco, rose to a new record 6.7% from 6.4% the previous month. In addition, the harmonized CPI used to compare prices with other EU member states rose to 8.9% from 8.4%. Every month, consumer prices increased by 1%.   LOOKING AHEAD: Today, investors should watch out for the following important data: - GBP: CPI y/y, Core CPI y/y, PPI Input m/m, PPI Output m/m, RPI y/y, HPI y/y, and Visitor Arrivals m/m. - JPY: Tertiary Industry Activity m/m. - USD: Core Retail Sales m/m, Empire State Manufacturing Index, Retail Sales m/m, Capacity Utilization Rate, Industrial Production m/m, Business Inventories m/m, NAHB Housing Market Index, Crude Oil Inventories, and TIC Long-Term Purchases. - EUR: Industrial Production m/m, Trade Balance, German 30-y Bond Auction, and ECB President Lagarde Speaks. - CAD: Housing Starts, Manufacturing Sales m/m, and Wholesale Sales m/m. - AUD: RBA Gov Lowe Speaks. - NZD: Visitor Arrivals m/m.   KEY EQUITY & BOND MARKET DRIVERS: Кey factors in the stock and bond market are currently: - US: The U.S. 10-year Treasury yield topped the 3.6% mark on Tuesday after falling to a five-week low of 3.51% in the previous session, as investors digested the latest inflation data, while instability in the U.S. banking system continued to underpin concerns about safer markets—Demand for government bonds. U.S. consumer prices rose an annual average of 6% in February, slowing for the eighth month and in line with market expectations. Still, rising housing costs pushed core consumer prices up 0.5 percent from the previous month, more than expected, underscoring inflationary pressures in the economy. In addition, investors widely expect the Fed to raise its fund's rate by 25 basis points at its next meeting, down from a previous bet of 50 basis points, swap prices showed, as the closure of major U.S. banks threatens the financial stability of the U.S. economy, despite authorities All deposits are guaranteed to be safe. - US: Stock futures contracts tied to the three major indexes rose nearly 1% on Tuesday, with Wall Street poised to open higher as investors reacted to the latest U.S. inflation data. The Labor Department's CPI report showed monthly inflation rose 0.4% in February from January, in line with expectations, causing annual inflation to slow to 6%, the lowest since September 2021. Still, the same report showed core inflation beat expectations, underscoring a still-challenging macro environment. In addition, investors have been speculating that the Fed will soon be able to pause its tightening cycle as concerns mount over the health of the broader financial system following the collapse of SVB and the closure of Signature Bank. Meanwhile, regional bank stocks rallied in premarket trading, with First Republic Bank surging nearly 60%. - UK: U.K. 10-year gilt yields held below 3.4 percent, hovering near their lowest level since Feb. 10, as investors sought safety amid worries about the U.S. banking system and uncertainty over U.S. monetary policy. Investors worried that the collapse of Silicon Valley Bank could ripple through the entire banking system while assessing the possibility that the Federal Reserve will not control interest rates at its March policy meeting. 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. On the data front, wage growth in the UK slowed in the three months to January, with gross wages and fixed pay rising by 5.7% and 6.5%, respectively, down from 6% and 6.7% in the previous period. Investors are now awaiting the new budget to be unveiled by Chancellor of the Exchequer Jeremy Hunt on Wednesday. - CH: The yield on the 10-year Swiss government bond was at 1.2%, slightly above the five-week low of 1.15%, as investors assessed threats to the stability of European banks after the closure of US lenders triggered a flight to the safety of government bonds. Meanwhile, Swiss National Bank officials continued to warn that inflation in the country remained too high and risks of second-round sticky persisted. While traders generally expect the SNB to raise its key interest rate by 50 basis points next week, economists have not completely discounted a more aggressive 75 basis point hike. Consumer prices in Switzerland rose 3.4% annually in February, well above market expectations of a 3.1% increase and SNB forecasts of 3%.   LEADING MARKET SECTORS: - Strong sectors: Financials, Communication Services, Materials, Information Technology. - Weak sectors: Real Estate, Energy.   TOP CURRENCY & COMMODITIES MARKET DRIVERS:  Кey factors in the currency and commodities market are currently: - USD: The U.S. dollar index rose to 103.95 on Tuesday after falling nearly 1% in the previous session. Investors tried to gauge the next step of monetary policy after the collapse of Silicon Valley banks and another slowdown in inflation. U.S. inflation fell to 6% in February, the lowest since September 2021, in line with expectations, the latest data showed. As a result, compared with the previous week, money markets are now pricing in a 31 percent chance that the Fed will keep rates on hold next week, with a rate cut expected as early as June until the end of the year. - WTI: WTI crude oil futures fell 5% to around $71 a barrel on Tuesday, closing at its lowest level since December 2021, as concerns over the health of the broader financial system continued to hang over the market. The collapse of New York-based Silicon Valley Bank and Signature Bank triggered worries about risks to other banks stemming from the Federal Reserve's sharpest rate-hiking cycle since the early 1980s. However, hopes of a recovery in Chinese demand and a weaker dollar were kept low under prices. In its March report, OPEC forecasted higher oil demand from China, the world's largest oil importer, in 2023. Estimates for average global supply have remained unchanged, although uncertainties remain about the impact of developments in geopolitical debates and US shale production potential in 2023. - OIL: Brent crude futures fell nearly 5% to around $77 a barrel on Tuesday, extending a 2.4% loss in the prior session as the Silicon Valley Bank collapse raised concerns about a broader financial and economic crisis. They were triggering a sell-off in risky assets. Meanwhile, hopes of a recovery in Chinese demand and a weaker dollar were kept low under prices. In its March report, OPEC revised its forecast for the Chinese market for 2023, maintaining its forecast for global oil demand growth unchanged. Estimates for average global supply have also remained broadly unchanged, although uncertainties remain about the impact of ongoing geopolitical developments and the production potential of US shale in 2023. inventories. - SLV: Silver futures were above $21.7 an ounce, maintaining a sharp rebound from the four-month low of $20 they hit on March 8 as investors digested the latest price data and continued to assess the volatility of the US banking sector for clues about the Federal Reserve's tightening path in the coming months. While the US CPI aligned with expectations, rising housing costs lifted the core reading to a warmer-than-expected 0.5% in February, underscoring inflationary pressure. However, high demand for safe assets supported bullion prices after the closure of major US banks threatened global financial stability. Also, fears that other banks could fail due to high borrowing costs have tempered expectations about how high the Federal Reserve could hike rates. Tight supply also aided the rebound, with LBMA and COMEX inventories remaining low. - GLD: Gold prices moved slightly around the $1908 an ounce level on Tuesday, near high levels not seen since early February, as investors digest the latest US CPI report, adjust their expectations of monetary tightening, and worries about the collapse of SVB and Signature Bank and the news that Credit Suisse found "substantial weaknesses" in its reports continue to raise fears of contagion to other banks, leading to an aversion to the risk. The US inflation rate slowed as expected, but the headline monthly rate accelerated, a sign that inflationary pressures remain high. As a result, most investors expect a 25-basis point rate hike from the Fed next week. Week. Meanwhile, the ECB raised rates by 25 or 50 basis points. - GAS: U.S. natural gas futures rose for a second straight day on Tuesday, trading above $2.6/MMBtu, further away from the near-3-week low of $2.4 in the previous session, thanks to surging LNG exports and the increase in demand. The total amount of gas flowing to the seven largest U.S. LNG export facilities had increased so far to 11.1 billion cubic feet in March 2023 from 12.8 billion cubic feet in February, breaking a monthly record of 12.9 billion cubic feet achieved in March 2022 when the Freeport plant returned to service following the fire-related shutdown in June 2022. Meanwhile, average U.S. gas demand, including exports, is expected to rise to 120.4 bcf next week from 119.8 bcf this week, above forecasts from Refinitiv on Friday. On the other hand, average gas production in the lower 48 US states grew to 98.8 billion cubic feet this month, up from 98.2 billion cubic feet in the prior period.   CHART OF THE DAY: Sterling held above $1.21, hovering at its highest level since Feb. 21 and holding above 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. On the data front, UK wage growth slowed in the three months to January, and the Bank of England is watching closely to decide when to stop raising interest rates. Total compensation rose 5.7 percent year-over-year, down from 6.0 percent in the prior period, while payment excluding bonuses rose 6.5 percent from 6.7 percent. Investors are now awaiting the new budget to be unveiled by the Chancellor of the Exchequer Hunt on Wednesday.           Long-term Channels Trading Strategy: - GBPUSD-; Chart with time-frame (D1); The primary Resistance with a potential (target area) is around ~ ( 1.221 & 1.232 ),  and the direct Support with a prospect (consolidation area) is everywhere ~ ( 1.189 ).  Therefore, the next most probable price movement is an (up / sideways) trend. *see details on the chart.