Ankur Banerjee takes a look at the day ahead in European and global markets.
U.S. Treasury Secretary Janet Yellen said that she was prepared to intervene to protect depositors in smaller banks, calmed some of the market's nerves, even as a scramble by embattled U.S. lender First Republic Bank kept worries about the sector alive, despite comments from U.S. Treasury Secretary Janet Yellen.
The collapse of Silicon Valley Bank, which sank under the weight of bond-related losses due to surging interest rates, kicked off a tumultuous 10 days for banks, with fears of a global meltdown rattling investors.
It brings us to the main event of the day, the Fed's policy meeting that ends on Wednesday at 2 p.m. EDT 1800 GMT. The policy statement is released half an hour later by Chair Jerome Powell.
There is a 15% chance of a 25 basis-point interest rate hike by the Fed and an 85% chance of no increase, according to traders. A month earlier, the market was pricing in a 24% chance of a 50 basis-point hike.
The past two weeks have heightened expectations, with market funding conditions tightening sharply since the collapse of Silicon Valley Bank and a rout in Credit Suisse shares that led to a shotgun takeover on Sunday by Swiss rival UBS.
It remains to be seen if that's enough for central banks to stop hiking.
The MSCI ex-Japan index rose by 1.3%, while the dollar and gold traded in narrow ranges. In the corporate world, GameStop posted a surprise profit for the fourth quarter, its first since early 2021, sending the meme stock nearly 50% higher. Shares of another meme stock, Bed Bath Beyond, fell below $1, leaving the retailer at risk of losing additional funding from hedge fund Hudson Bay Capital Management. The stock price threshold was temporarily reduced to $1 until April 3, according to an agreement with Hudson last week.
Key developments that could influence markets on Wednesday: