European indices collapsed because of the problems with Credit Suisse. Oil falls amid intensifying banking crisis

The consumer price index in France rose from 6.0% to 6.3% in annual terms. Inflationary pressures in Europe remain resilient and figures from Germany, Spain, and France clearly show it. Reuters reported yesterday that the European Central Bank intends to stick to its plans to raise its key rate by 50 basis points at its meeting today. ECB head Christine Lagarde’s remarks on the European central bank’s future plans are also worth a closer look. The Office for Budget Responsibility (OBR) forecast, taking into account the new UK budget, argues that the country will not enter a technical recession as originally thought. Instead, the UK economy is expected to contract by a modest 0.2%. The government has also pledged to halve inflation, and further OBR projections suggest that inflation will fall to 2.9% by the end of 2023.

Gold strengthened its position at $1900 on Wednesday, hitting a new six-week high. The banking crisis is forcing investors to hide money in precious metals. The technical on spot gold suggests it could go much higher. The fundamental picture now is also in favor of further growth in gold and silver.

Crude oil prices are down for the third straight day. The US WTI crude oil has fallen below $70 a barrel. The collapse of SVB, the problems of Credit Suisse, and the general financial instability contribute to the decline in quotes. While US authorities tried to ease fears of a broader contagion in the banking sector, the financial turmoil at Swiss bank Credit Suisse posed an additional threat to the global economy. At the same time, the IEA (International Energy Agency) reported an increase in oil inventories, pushing oil supply to an 18-month-high.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) gained 0.03%, China’s FTSE China A50 (CHA50) added 0.02%, Hong Kong’s Hang Seng (HK50) jumped by 1.52%, India’s NIFTY 50 (IND50) declined by 0.42% and Australia’s S&P/ASX 200 (AU200) was positive 0.86% by Wednesday.

Bank of Japan (BOJ) Governor Haruhiko Kuroda, who is retiring in April, said his ten-year monetary experiment, during which $3.7 trillion was injected into the economy, was “half successful.” In addition to lowering borrowing costs, Kuroda’s policies sought to sway public opinion and lead the public out of deflation with a powerful kick of monetary stimulus. Kuroda left a mixed legacy for the Bank of Japan: his massive stimulus was praised for pulling the economy out of deflation, but it reduced bank profits and distorted market functions through prolonged low rates. In 2016, Kuroda added a cap on long-term rates as part of a policy called yield curve control (YCC), which is still in effect. Many analysts expect the Bank of Japan to begin dismantling Kuroda’s stimulus policy under a new governor, Kazuo Ueda.

In Australia, the latest labor market data showed that the economy added 64,600 jobs last month, with the unemployment rate falling to a record 3.5%. The stronger-than-expected employment figures for February reinforced fears of further interest rate hikes by the Reserve Bank of Australia (RBA).