NAS100 Subdued as Markets Digest SVB News & Recession Prospects

  • NAS100

NAS100 Analysis

The run on Silicon Valley Bank earlier this month, forced regulators to shut it down and sparked a financial turmoil that spilled across the Atlantic as well. Yesterday, First Citizens Bank agreed to buy about $72 billion of SVB's assets at discount of $16.5 billion. [1]

This helps sentiment, along with a series of reassurances around the banking system, which remains "sound and resilient" according to readout of Friday's Financial Stability Oversight Council Meeting, despite the fact that some institution have "come under stress". [2]

Furthermore, the banking rout constrained the US Fed to a small rate increase last week and a dovish shift in its guidance, projecting just one more hike ahead [3]. The tame policy path and market expectations around it, have supported Wall Street.

However, there is still uncertainty around the health of financial system and the impact of recent events on the economy, which may tip it into a recession. Speaking on CBS's Face the Nation yesterday, Minneapolis Fed president Neil Kashkari (voter) alluded to that prospect, noting that they bring us "closer right now". [4]

Investors also contemplate renewed geopolitical tensions after Russian President Putin announced his intention to station tactical nuclear weapons in Belarus [5]. A NATO spokesperson talked of "dangerous & irresponsible" rhetoric, but Western reaction appears muted so far, since allies have "not seen any changes in Russia's nuclear posture". [6]

NAS100 has exhibited remarkable resilience and comes from two straight profitable week, having set new 2023 highs. This brings 13,210 in its crosshair, but it does not yet inspire confidence for challenging 13,724.

The current week starts in a cautious manner though, with the tech heavy index capped by the 13K handle. This could create pressure towards the EMA200 (at around 12,300), but a strong catalyst would be required for further decline, and NAS100 appears well protected from that point on.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.



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