Equities Bounce Back As Traders Look Beyond Banking Troubles 

Global equities benchmarks are climbing strongly at the start of the week. Despite a sea of red as we opened yesterday, losses were quickly reversed and risk appetite was seen returning as news of the UBS purchase of Credit Suisse made its way through markets. Although there were some concerns initially linked to treatment of bondholders, the deal is now being viewed as a positive with EU regulators reassuring markets that the overall banking system is in good health and EU-bank exposure to Swiss banks is in the millions not billions.

In the US, the main focus is the FOMC meeting which concludes tomorrow. Recent events, alongside a drop in inflation, have turned expectations away from a larger .5% hike with pricing now split between a smaller .25% hike and no hike at all. On the back of the Credit Suisse debt write off, the US Treasury is looking into ways to expand FDIC to all US banks in a bid to help cover any losses and keep liquidity levels healthy.

In the UK, traders are mulling the prospect of no hike at all from the BOE this week. The BOE announced this week that it would be boosting Dollar liquidity lines to regional banks in a bid to support liquidity. With inflation turning lower, many are now looking for the bank to pause its tightening campaign in response to recent market turmoil which, if seen, should see the FTSE rebounding.

Technical Views

DAX

The rebound off the 14703.98 level has seen the DAX trading back up to test the 15163.41 level. With momentum studies turning higher off lows, there is room for the index to regain upside focus if we can break current resistance.

S&P 500

The latest test of the 3910 level support has seen the market turning higher again. With momentum studies turning bullish, the focus is on a further move higher with 4153.50 the key upside level to note.

FTSE

The decline in the FTSE saw the market moving as low as a test beneath the 7337.6 level. However, the move ran into decent buying interest and we are now trading back above the level. With momentum studies moving off lows, the focus is on a fresh challenge of the 7678.8 level next.

NIKKEI

The Index has bounced off the 26407-level following the sharp decline from highs above 28500. The index is currently sitting around mid-range with 27422.9 the next challenge for bulls if they are to regain upside momentum.