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Global Market Update: Bank injection boosts Asian markets, Fed predicted to start cutting rates in June

Asian stock markets rose early today in response to news that 11 major banks on Wall Street, including JPMorgan and Goldman Sachs, announced a combined $30 billion injection to add liquidity to the First Republic Bank (FRB), a US regional bank.

Most investors predict that the US Federal Reserve (Fed) will raise interest rates by only 0.25% at its meeting on March 21-22, and will start cutting rates in June. This is earlier than previously expected as the Fed was expected to start cutting interest rates in 2024.

According to Edward Yardini, president of research firm Yardini, the collapse of Silicon Valley Bank (SVB) would allow the Fed to end rate hikes earlier, and may cause bond yields to reach the highest point. Yardini also said, “if the Fed stops raising interest rates and inflation rebounds, the Fed can come back to raise interest rates in the future.”

Germany is also in the news, as Verdi, the German trade union, announced a strike today (March 17) to demand more wages. The strikes will affect four German airports: Stuttgart, Karlsruhe, Dusseldorf, and Cologne-Bonn, which is shared between Cologne and Bonn. The strike will affect 169 flights and 20,000 passengers, with passengers being told that flights will be cancelled, and some flights will experience delays, as customs and security officials staged a strike.

Verdi is demanding a wage increase of 10.5 percent, or 500 euros per month, in line with the rising cost of living. The next wage talks between Verdi and management are scheduled for March 27-29, after several previous negotiations failed to reach a resolution.

Lastly, keep an eye on today’s economic data: Singapore is preparing to release export sales figures for February, while the EU releases inflation data for February. The United States is due to release industrial production figures for February, the preliminary consumer confidence index from the University of Michigan in March, and leading economic indicators for February from the Conference Board.

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