IAIC Market Update - March 20, 2023

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• Friday’s St. Patrick’s Day celebration coincided with the ending of about ten days of market turmoil. The widely varying opinions of the significance for investors of recent events had the North American indexes reflecting the same lack of clarity. The NASDAQ and the Dow gained 4½ and 1½%, respectively, for the week while the TSX dropped by 2%.
• A number of important economic indicators were released, but fears over the failures of two U.S. banks, and difficulties for two more, First Republic and Credit Suisse, drove the news cycle early last week. 
• The failures of Silicon Valley Bank and Signature Bank were the first since 2020, and the 512th and 513th since 2008. Elsewhere, First Republic received a capital injection of $30 Billion from other banks. On Sunday a $3.2 Billion purchase of Credit Suisse by UBS was announced. 
• The European Central Bank (ECB) “decided to increase the three key ECB interest rates by 50 basis points, in line with its determination to ensure the timely return of inflation to the 2% medium-term target.” 
• The U.S. Consumer Price Index (CPI) for February was released on Tuesday at 0.4% for the month and 6.0% year-over-year. 
• The recent events in the financial industry that require stability measures may hamper the Fed’s ability to address inflation. The implications for the Federal Reserve’s interest rate announcement on Wednesday are being considered in light of the late Sunday sale of Credit Suisse.      

Sources: ECB, CNBC UBS and CS, Bureau of Labor Stats and CPI

What’s ahead for this week?

• In Canada, the consumer inflation data and new housing price index for February will be released on Tuesday morning prior to market-open.
• In the U.S., several housing indicators are scheduled for release including existing and new home sales, building permits, mortgage applications, mortgage market and refinance indexes. The most compelling release will be Wednesday’s interest rate decision from the Federal Reserve. 
• Globally, consumer confidence and the trade balance for the Eurozone will be announced along with manufacturing and services Purchasing Managers Indexes for the region. In Asia, an interest rate announcement is due from the Peoples Bank of China, and Japan’s CPI are scheduled for release.