Daily Analysis 16/03/2023

Industrial production in the Euro Zone increased by 0.7% in January compared to the previous month, while it increased by 0.9% on an annual basis. The producer price index in the USA fell by 0.1% in February, while it increased by 4.6% year-on-year, below the expectations. Core PPI did not change on a monthly basis, but decreased from 5.4% to 4.4% on an annual basis. Retail sales in the country decreased by 0.4% in February, in line with the forecasts. While the meeting of the European Central Bank to be held today and the statements of President C. Lagarde will be the major topic of the day, volatility may increase during the day. After the banking crisis, the weakening of risk appetite became prominent, while interest rate expectations deteriorated.

British Finance Minister Jeremy Hunt stated that the British economy will not enter a technical recession this year, and that inflation will be reduced to 2.9 percent at the end of the year. In his speech to the parliament on the British government's "Spring Term" budget, Minister Hunt stated that his government's government support through energy companies will continue to reduce household bills, and noted that household energy bills will be kept at the level of 2,500 pounds per year for the next three months.

It has been observed that volatility has been high in ounce gold since the beginning of the week. It is noteworthy that although there is a decrease below the $ 1900 level, it is still trying to hold above the $ 1900 level. This morning, the dollar index is trading in the range of 104.45-104.66. In the markets, developments related to banks are followed closely. While the expectations for the Fed are concentrated in the direction of a 25 basis point rate hike, it is seen that the uncertainty about the Fed meeting to be held next week continues. This can put pressure on risk appetite. The interest rate decision of the European Central Bank (ECB) will be announced today. After the decision, the speech of ECB President Lagarde will be followed. ECB-induced volatility may occur.

The 'absolute refusal' by one of Credit Suisse Group AG's major shareholders to invest further in the bank has caused bank management to struggle to establish trust and churned financial markets from the US to Europe. After Credit Suisse obtained a loan from the Swiss National Bank to "strengthen its liquidity", some recovery was observed in the markets. Selling pressure has reached a global dimension, especially in European banks. The fact that three US banks, previously including Silicon Valley Bank, went bankrupt within a week didn't help markets where risk appetite was already low. The S&P 500 closed the session down 0.70% at 3,891. As of this morning, the outlook for the S&P 500 futures contract is at 3,904.