Daily Market Commentary 16th March 2023

European markets stepped into the USA’s banking crises, with a halt to trading on several major European Banks. Credit Suisse has been under great pressure, for some time now, which spiked to new levels. The Swiss Bank announced some systemic weaknesses and their major backer (Saudi National Bank) denied further ongoing financial support. Chaos ensued on European bourse’, when several major banks suspended trading in the opening session, Wednesday. The negative sentiment spread quickly to US markets and the rout continued, on US Share markets. The danger is failing confidence in the Banking sector and a full-blown crises. The ECB will be in crises talks and may well reappraise their interest rate decision, in tonight’s meeting? The EUR tanked following the furore, plunging to 1.0520, while the GBP fell back to 1.2000.

The commodity currencies are not immune to the market turmoil, with the AUD plunging below 0.6600, while the NZD fell back o 0.6180. NZ recorded a record deficit, with the Q4 Current Account deficit coming in a $9.45 billion. The final number for the year end 2022, was a deficit of $33.8 billion, the highest since records began. There are warnings from ratings agencies that NZ is in danger of a downgrade. These is not good economic conditions and questions must be asked about funding this deficit and foreign exchange reserves. Local attention will turn to the latest GDP number, to be released today, which is expected to turn negative. Attention will be focused heavily on Central Banks and in particular, the ECB, which announces their latest interest rate decision tonight.