AU Shares See Promising Lift Due to Easing Banking Crisis

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The ASX is showing its resiliency despite the recent economic blows brought about by the collapse of SVB and recently the takeover of Credit Suisse by UBS. Investors gain confidence as the economy bounces back due to the ease of banking woes.

Just last 22 March, the Australian shares picked up by 1 per cent due to positive returns of banking stocks, even though there is still no formal hike decision from the US Federal Reserve’s interest rates.

According to the findings of a Reuters Poll, “Investors would be keenly awaiting the outcome of the Fed’s monetary policy meeting due later in the day, where economists are widely expecting a 25 basis point interest rate hike.” 

Experts also noted that the RBA is considering a rate pause in the second quarter of 2023. Furthermore, the financial sector’s ‘big four’ lenders rose between 1.7 and 1.8 per cent.

According to Riya Sharma, a contributing journalist for Reuters, adding that “The Federal Deposit Insurance Corporation (FDIC) confirmed that the First Citizens BancShares Inc will acquire all of Silicon Valley Bank’s deposits and loans from the regulator, bringing some respite to markets which have been roiled by worries of a credit crunch and wider banking crisis.”

Tony Sycamore, an analyst for IG, also noted that investors’ attention will be focused on the banking sector as the markets continue to press for banking pressure points.” 

However, head of equities at RBC Capital Markets Karen Jorritsma noted that low trading volumes and a correction from substantial losses in previous weeks gave way to the recent lift in the share markets.

The Australian Bureau of Statistics (ABS) recently released figures that support what experts believe, that inflation is indeed slowing down and that job vacancies are steadily declining. Experts also hope the RBA will not raise rates as aggressively as anticipated.

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