ThinkAhead - Global Markets Brace for Turbulent Week Amid Banking Sector Concerns and Recession Fears

The global markets are gearing up for another tumultuous week ahead as Investors are still concerned about the banking sector as turmoil spreads to other jurisdictions. Deutsche Bank's recent 11% plunge on Friday has added to these concerns. In Switzerland, Credit Suisse is facing potential probe and disciplinary action from the country's banking regulator over how top managers ran the bank leading up to its collapse and takeover by UBS Group AG. The regulator cites a "cultural problem" and "negligent handling of risks" at Credit Suisse, and the possibility of fresh proceedings is being explored.

One of the key factors that could weigh on market sentiment is recession fears as Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, warned that recent banking sector turmoil could increase the risk of a US recession. While the leader of the International Monetary Fund, Kristalina Georgieva, urged increased vigilance over the global financial system during a speech in China on Sunday. She also highlighted some positive developments in the world's second-largest economy. However, she also reiterated the IMF's projection that the world economy is expected to experience a slowdown to just under 3% this year due to the lingering impact of the pandemic, the conflict in Ukraine, and tighter monetary policies.

On the earnings front, several Chinese companies, including the Industrial and Commercial Bank of China, the China Construction Bank Corporation, the Agricultural Bank of China, PetroChina, and the Bank of China, are scheduled to release their earnings reports for the period ending December 2022. These reports will shed further light on the impact of last year's zero-COVID policy-related lockdowns.

To conclude, this week's economic calendar includes the expected release of the Euro area unemployment rate on Friday. Locally, the South African Reserve Bank will announce its second interest rate decision of the year on Thursday, with the market anticipating a 25 basis point increase in interest rates, in line with similar hikes in the US and the UK last week. This is particularly relevant after South African consumer inflation exceeded expectations and rose to 7% in February. Additionally, South African producer inflation data is also expected to be released this week.

Overall, the coming week is likely to be marked by heightened uncertainty and volatility, with the banking sector, interest rates, and recession fears remaining the key themes for investors to watch. Traders are advised to remain cautious and closely monitor market developments in order to make informed decisions.

Economic Calendar Highlights:

Tuesday 28^th of March:

• AUS – Retail sales (FEB)
• FRA – Business Confidence (MAR)

Wednesday 29^th of March:

• GER – Consumer Confidence

Thursday 30^th of March:

• SPA – Inflation Rate (MAR)
• ZAR – PPI (FEB)
• ZAR - Interest Rate Decision

Friday 31^st of March

• JAP – Unemployment Rate (FEB)
• China - NBS Manufacturing PMI (MAR)
• FRA – Inflation Rate (MAR)
• Euro Area – Unemployment Rate (FEB)
• Italy – Inflation Rate (MAR)
• US – Personal Income (FEB)