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Asia markets rebound amidst financial crisis fears

Asian stocks surge ahead of key economic data
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March 21, 2023 (MLN): Asian markets experienced a rebound on Tuesday following the recent panic caused by concerns of another financial crisis.

The rally was boosted by reassurances from authorities in leading economies who pledged support for depositors and troubled banks, and the collapse of Silicon Valley Bank and Signature Bank in the United States appeared to have faded.

However, the takeover of troubled Credit Suisse by UBS for $3.25 billion fueled concerns about what could be next on the chopping block, and analysts warned that it was too early to say that the crisis was over.

Despite this uncertainty, all three main indexes on Wall Street ended positively, with the Dow rising by over one percent, and European markets also performing well.

The saving of Credit Suisse and promises of support from the Fed and other central banks helped to bolster investor confidence.

However, the embattled First Republic Bank collapsed by almost 50%, despite a coalition of US lenders pledging to inject $30bn into it.

The upheaval in the banking sector has led traders to re-evaluate their bets on the Fed's interest rate plans, with speculation that it may cut rates by the end of the year to provide stability, despite still-elevated inflation.

Before the crisis, expectations were for borrowing costs to rise as high as 6%, but now forecasts are for them to end at around four percent.

Currently, at 4.5%-4.75%, there is much talk about whether the US central bank will hold fire at its Wednesday decision or lift rates by 25 basis points.

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Posted on: 2023-03-21T10:27:52+05:00