GER30 Supported as Banking Fears Ebb
GER30 Analysis
The agreement of UBS to buy embattled domestic rival Credit Suisse [1], helped assuage markets fears over the heath of the financial system. However, worries persist and this manifested late last week in pressure to Deutsche Bank, which saw its stocks plunging more than 8% to 2023 lows on Friday.
The German banking giant appears to have a strong financial position though, with Net Profit of 5.6 billion in 2022 – the highest since 2007 . German Chancellor Olaf Scholz noted that Deutsche Bank "has modernized and organized the way it works. It's a very profitable bank. There is no reason to be concerned" [3]. Furthermore, in a joint statement on Friday, leaders of all 27 EU countries stressed that "Our banking sector is resilient, with strong capital and liquidity positions". [4]
The Silicon Valley Bank meanwhile, whose collapse sparked the banking turmoil, was sold to First Citizens Bank. It will assume all loans and deposits of about $72bllion, at a discount of $16.5 billion. [5]
These developments help sentiment today, but there is still uncertainty that could spark renewed fears, while markets also monitor fresh geopolitical tensions. Russian President Putin announced plans to station tactical nuclear weapons in neighboring Belarus, with a seemingly muted reaction so far from the West. [6]
GER30 starts the week in upbeat mood and the road towards 15,739 remains open, having defended the 38.2% Fibonacci of the December lows/March high advance, although this may prove elusive in h near term. Bulls are trapped within the daily Ichimokou Cloud, as fears over the banking system have not been eliminated, while ECB stayed on its aggressive tightening path recently. As, such, there is scope for renewed pressure, but strong catalyst will be required for daily closes below the 200Days EMA (at around 14,420).
Nikos Tzabouras
Senior Market Specialist
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.
References
| Retrieved 27 Mar 2023 https://www.ubs.com/global/en/media/display-page-ndp/en-20230319-tree.html | |
| Retrieved 27 Mar 2023 https://twitter.com/dw_europe/status/1639273282871386114 | |
| Retrieved 27 Mar 2023 https://www.consilium.europa.eu/en/meetings/euro-summit/2023/03/24/ | |
| Retrieved 27 Mar 2023 https://www.fdic.gov/news/press-releases/2023/pr23023.html | |
| Retrieved 24 May 2023 https://www.youtube.com/watch |
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