NASDAQ COMPOSITE BULLISH ON TECH

Despite concerns about inflation and rising interest rates, investors seem optimistic about the potential for continued growth in the tech sector as the Nasdaq index hit new record highs, driven by strong earnings from companies such as Apple, Amazon, and Meta Platforms. However, some experts are concerned that the tech sector is becoming overvalued and warn of a potential market pullback.

MARKETS ROLLERCOASTER

In January, the markets began on a high note as China lifted COVID restrictions. But just as things were going smoothly, markets suffered a setback in February due to a sudden spike in interest rates. And then, in March, the markets experienced significant turbulence due to a series of high-profile banking incidents, resulting in unstable fluctuations.

FED’S WAIT-AND-SEE MODE

The Federal Reserve has stabilized emergency lending to banks at high weekly levels up until Wednesday. Despite this, the futures market is uncertain if the Fed will make another quarter-point rate hike at their meeting in May. While some believe it’s possible, the Fed plans to be cautious, taking into account data such as the economy’s strength and inflation to reach a well-informed decision. Currently, the sentiment is that they are in “wait and see” mode on further rate hikes, considering a gradual increase of a final quarter-point hike meeting to meeting.

SMALL BANKS SUFFER AS DEPOSITS MIGRATE TO LARGER BANKS AMIDST BANKING TURMOIL

Small banks are facing a decline in deposits due to the rise in interest rates. Many investors are seeking higher yields in money-market funds and other investment opportunities offered by larger banks. The flight of deposits is causing pain for smaller institutions, while the 25 largest banks have seen an increase in deposits, widening the gap between big and small banks.

INVESTOR CONFIDENCE SHAKEN AS SWITZERLAND WRITES OFF $17 BILLION OF CREDIT SUISSE BONDS

Switzerland recently surprised the market by writing down $17 billion of bonds under Credit Suisse’s rescue plan. These bonds were designed to absorb potential losses in the event of a financial crisis. However, this move has shaken investor confidence in such debt instruments, and the market may take a long time to regain trust. As the dust settles on this surprise move, investors are left unsure about the safety of similar bonds issued by other banks.