Sterling maintains gains made yesterday after surging to a three-month high against the euro in the lead up to, and aftermath of, the chancellor’s Budget. Against the dollar, sterling fell 1% over the course of the day and remains weaker today.
In the stock markets, investors witnessed key indexes across the eurozone fall under pressure yesterday following the collapse of Silicon Valley Bank (SVB) in the US last week plus the news of Credit Suisse plunging 24% to a new record low. This comes after top shareholder, Saudi National Bank ruled out any further support for the troubled bank.
Late Wednesday night Credit Suisse announced it would accept a 50bn franc facility offered by the Swiss National Bank. The Swiss National Bank (SNB) and the country’s financial regulator issued a statement confirming that Credit Suisse met “the capital and liquidity requirements” it needed to and that “if necessary, the SNB will provide Credit Suisse with liquidity.”
In his latest Budget, Hunt addressed economic growth for the UK with measures to get both parents and older workers back to the workforce, but taxes on business profits rise. With comments on the UK avoiding recession, the Budget overall gave sterling an unexpected boost against the euro and many will be watching today to see how the pound will respond.
All eyes now turn to the European Central Bank which will decide on interest rates this afternoon.
European stocks, including the UK’s blue-chip FTSE 100, plummeted by approximately 2.5% before lunchtime today. The STOXX 600 was down 3%, to its lowest level since January 3rd and the Stoxx bank index tumbled nearly 8%.
The latest US retails sales data was released yesterday, revealing sales in the US were down 0.4% month-over-month in February. Markets were expecting a 0.3% fall, following an upwardly revised 3.2% surge in January.
Producer prices for final demand in the US also went down on Wednesday, falling 0.1% month-over-month in February 2023. However, this was against market expectations of a 0.3% increase.
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