On Wednesday (March 15), the Dow Jones New York Stock Exchange closed lower as investors became increasingly worried about the financial situation at Credit Suisse, which overshadowed expectations that the Federal Reserve (Fed) would delay its rate hike at this month’s meeting. The late decline came after media reports that the Swiss government held a meeting to find ways to stabilize Credit Suisse’s finances. The Dow Jones Industrial Average closed at 31,874.57 points, down 280.83 points or -0.87%.
Meanwhile, the Bank of England (BoE) reportedly held an emergency meeting with central banks and international financial regulators amid rising anxiety about the crisis at Credit Suisse. This follows concerns that the banking crisis has spread from the United States to Europe.
In other news, a 7.1-magnitude earthquake struck New Zealand’s Kermadec Islands on March 16, according to the US Geological Survey (USGS). The epicenter was about 10 kilometers (6.21 miles) underground, and the US tsunami warning system issued a tsunami warning following the earthquake.
Back to financial news, Switzerland’s financial regulator has pledged to provide liquidity to help Credit Suisse banks after its stock price plummeted on Wednesday (March 15). The Swiss central bank and FINMA, Switzerland’s financial market regulator, have sought to ease investor concerns over the situation at Credit Suisse, stating that the bank still has a capital base and liquidity that meets the requirements of systemically important banks. The Swiss Federal Reserve also confirmed that it will provide Credit Suisse with liquidity if necessary.
Looking ahead, investors predict that the Federal Reserve (Fed) will not raise interest rates at its meeting this month and will reduce the total interest rate by 1% by the end of the year, as the banking crisis spreads from the United States to Europe. CME Group’s FedWatch Tool indicates that investors are 52.0% weighted towards the Fed holding interest rates at 4.50-4.75% at its March 21-22 meeting and 48.0% weighted towards a 0.25% interest rate increase.
In terms of economic data, Japan is scheduled to release import, export, and trade balance figures for February, machinery orders for January, and industrial production for January. Australia will release its unemployment rate for February, and the Bank of Indonesia (BI) is due to announce its interest rate resolution. The US is set to release weekly jobless claims, February home and building permits, March manufacturing index from Philadelphia Fed, and import prices – export prices for February. The European Central Bank (ECB) is also scheduled to announce its interest rate resolution.