27 March 2023

Investors between inflation and banking system stability

Another week in which the themes of inflation and banking system stability remained the focus of investors’ attention. Concerns generated by Credit Suisse calmed on the announcement of the merger with UBS, but towards the end of the week new fears appeared on the market, with rumours about Deutsche Bank and the difficult stabilisation of First Republic Bank in the US. On the inflation front, Fed Governor Powell’s words – after announcing a 25 basis point rate hike – did not seem to convince markets, which were more inclined to a scenario of falling rates as early as the end of 2023. Let us look at some data from our weekly analysis.

In the past week, 82% of the instruments and indices used for our analyses recorded a positive change. 15% experienced a negative variation. Analysing by macroclass, 83% of the equity instruments and indices recorded a positive weekly variation. 89% of bond instruments and 78% of the other asset classes used for our analysis.

However, investors remain very cautious. Our global analysis shows that gold and cash continue to be the favoured assets in this phase of the market.

Improving valuations in the past week accounted for 36 per cent of the total. The previous week, valuations that were upwardly adjusted were 41% of the total.

Among the equity analyses, improving valuations accounted for 37% of the total.

Among the analyses for bonds, 25% of the total were upgraded valuations.

Among analyses relating to other asset classes, improving valuations accounted for 59% of the total. Sentiment analyses as well as commodities and currencies were included in this section.

Of the valuations, 44% were above average in the short term. 29% were above the long-term average of valuations. Last week it was 44% and 32% respectively.