US stock markets experienced gains on Wednesday, with tech and financial shares leading the way, as investor risk appetite recovered from recent banking sector turmoil. The financial sector was hit hard by the collapse of three US banks this month but managed to rally on Wednesday, despite reports that the Federal Deposit Insurance Corp. was considering tightening the squeeze on larger banks to help cover the almost $23bn in costs from the bank failures.
In the benchmark, the tech-heavy Nasdaq 100 entered a bull market, rising 20% from a December low. This was an impressive feat, given the recent banking sector turmoil. The S&P500 climbed back above 4,000 with 1.42% daily gain on Wednesday, and all eleven sectors stayed in positive territory, showing that the market regained recovery strength.
The Real Estate and Information Technology sectors performed the best among all groups, rallying with more than a 2% gain daily. This is a significant development, as Wall Street analysts have found it challenging to predict how the stock market will react in the coming months, given the uncertainties surrounding the Fed’s future actions. Their average year-end goal for the S&P 500 has remained constant at 4,050 for three straight months, a phenomenon not seen since 2005.
The Dow Jones Industrial Average rose 1%, and the MSCI world index edged higher with a 0.2% gain for the day. This indicates that investor sentiment is gradually recovering, despite the recent banking sector turmoil.
Main Pairs Movement
On Wednesday, the US dollar showed some signs of recovery as it gained ground against most of its major counterparts. The DXY index rose 0.22% to 102.67, rebounding from a near seven-week low of 101.91 seen last week. Meanwhile, the Japanese yen was particularly volatile as Japan’s fiscal year-end drew near.
The EURUSD was little changed on Wednesday, as ECB rate-setters continued to talk about the need to raise interest rates further, offering support to the Euro. However, the pair slid sharply following touching the daily high of 1.0872 level during the UK trading session, and closed at 1.0844 for the day. On the other hand, the GBPUSD lost upside traction after reaching the daily high of 1.2361 level, and closed at 1.2312 level, experiencing a 0.23% daily loss.
The Gold traded slightly lower at $1,965 per troy ounce as financial markets remained optimistic despite concerns about the banking sector. Additionally, the macroeconomic calendar remained quiet for the third consecutive day, leaving little to motivate speculative interest and making room for some appreciation of the US Dollar. The XAUUSD dropped dramatically during Asian trading session but then hovered in a range from $1961 to $1969 marks during US trading hours.
|Currency||Data||Time (GMT + 8)||Forecast|
|GBP||BOE Inflation Letter||TBD||N/A|
|EUR||German CPI (YoY) (Mar)||20:00||7.3%|
|USD||GDP (QoQ) (Q4)||20:30||2.7%|
|USD||Initial Jobless Claims||20:30||196K|