Financial markets began the week amid escalated volatility despite the news that Swiss bank UBS would acquire Credit Suisse, resulting in risk appetite being sucked from markets.
The shotgun wedding between the Credit Suisse and UBS may have eased worries in the short term, but markets remain under pressure.
The Swiss banking crisis comes after the Silicon Valley Bank debacle from a week ago — and will surely not be the last.
The fallout from SVB — although more insulated compared with the Lehman Brothers’ collapse nearly 15 years ago — is still reverberating across the US banking sector, with First Republic Bank emerging as the next potential failure.
In the days that have followed, the US Federal Reserve and more than 10 US banks pumped $30 billion into the balance sheet of First Republic to keep it afloat.
The continuing turmoil in the global banking sector has raised risk, while the flight to safety amid the doom and gloom resulted in gold — a traditional safe haven — surpassing $2,000 a troy ounce for the first time since March 2022, when Russia invaded Ukraine.
Add this new, developing theme to the existing landscape of central bank policy and inflationary pressures, and markets should be in for a rocky ride through the start of the second quarter.
The emerging number of cracks in the banking sector will put a check on central bank policies to raise rates in a bid to ease liquidity concerns in the market.
Since my previous column two weeks ago, the Fed was expected to introduce a 50-basis point increase at its meeting on March 22.
However, markets are now pricing in with more than 75 per cent certainty that the Fed will deliver a 0.25 per cent increase before signalling a pause in future rate increases for the time being.
This would be a clear shift in policy, a knee-jerk reaction to these latest banking developments, which will, ultimately, batter US dollar-long positions.
Recall that a hawkish Fed keeps US dollar prospects bullish; increasing US rates leads to a stronger dollar.
If the Fed looks to suddenly turn dovish in the short term, this could result in the US Dollar Index, a measure of the value of the greenback against a weighted basket of major currencies, returning to its January channel of between 101.50 and 102.50.
This could be one of the most critical Fed meetings in recent memory — and chairman Jerome Powell’s comments at 10.30pm on Wednesday will clarify the trend for the next few months.
In the UK, the Bank of England is set to meet this week and deliver its policy decision on Thursday at 4pm Dubai time.
And as is the case with the Federal Open Market Committee (FOMC) decision, markets will focus on the need for a pause in rate increases from the Bank of England — similar to the action taken by the European Central Bank last week.
While the ECB did deliver a 50 bps increase, it was the dropping of its forward guidance that suggested to markets that the regulator will adopt a wait-and-watch approach, rather than the hawkish undertones of two weeks ago.
Watch: US Federal Reserve chief warns of 'pain' in reducing inflation
Also coming up is the US gross domestic product print on March 30, followed by the US personal consumption expenditure print, a key inflation metric, on March 31.
These prints seem slightly less important, with all focus on how the FOMC will approach the recent banking crisis — and how this will affect future interest rate policy.
Gaurav Kashyap is risk manager at Equiti Securities Currencies Brokers. The views and opinions expressed in this article are those of the author and do not reflect the views of Equiti Securities Currencies Brokers
THE CLOWN OF GAZA
Director: Abdulrahman Sabbah
Starring: Alaa Meqdad
Rating: 4/5
CHINESE GRAND PRIX STARTING GRID
1st row
Sebastian Vettel (Ferrari)
Kimi Raikkonen (Ferrari)
2nd row
Valtteri Bottas (Mercedes-GP)
Lewis Hamilton (Mercedes-GP)
3rd row
Max Verstappen (Red Bull Racing)
Daniel Ricciardo (Red Bull Racing)
4th row
Nico Hulkenberg (Renault)
Sergio Perez (Force India)
5th row
Carlos Sainz Jr (Renault)
Romain Grosjean (Haas)
6th row
Kevin Magnussen (Haas)
Esteban Ocon (Force India)
7th row
Fernando Alonso (McLaren)
Stoffel Vandoorne (McLaren)
8th row
Brendon Hartley (Toro Rosso)
Sergey Sirotkin (Williams)
9th row
Pierre Gasly (Toro Rosso)
Lance Stroll (Williams)
10th row
Charles Leclerc (Sauber)
arcus Ericsson (Sauber)
Wenger's Arsenal reign in numbers
1,228 - games at the helm, ahead of Sunday's Premier League fixture against West Ham United.
704 - wins to date as Arsenal manager.
3 - Premier League title wins, the last during an unbeaten Invincibles campaign of 2003/04.
1,549 - goals scored in Premier League matches by Wenger's teams.
10 - major trophies won.
473 - Premier League victories.
7 - FA Cup triumphs, with three of those having come the last four seasons.
151 - Premier League losses.
21 - full seasons in charge.
49 - games unbeaten in the Premier League from May 2003 to October 2004.
CONCRETE COWBOY
Directed by: Ricky Staub
Starring: Idris Elba, Caleb McLaughlin, Jharrel Jerome
3.5/5 stars
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
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MATCH INFO
Uefa Champions League final:
Who: Real Madrid v Liverpool
Where: NSC Olimpiyskiy Stadium, Kiev, Ukraine
When: Saturday, May 26, 10.45pm (UAE)
TV: Match on BeIN Sports
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The specs
Price: From Dh529,000
Engine: 5-litre V8
Transmission: Eight-speed auto
Power: 520hp
Torque: 625Nm
Fuel economy, combined: 12.8L/100km
Killing of Qassem Suleimani
Personalities on the Plate: The Lives and Minds of Animals We Eat
Barbara J King, University of Chicago Press
Anghami
Started: December 2011
Co-founders: Elie Habib, Eddy Maroun
Based: Beirut and Dubai
Sector: Entertainment
Size: 85 employees
Stage: Series C
Investors: MEVP, du, Mobily, MBC, Samena Capital
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How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
Score
Third Test, Day 1
New Zealand 229-7 (90 ov)
Pakistan
New Zealand won the toss and elected to bat
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
The specs
Engine: 2.0-litre 4-cyl turbo
Power: 247hp at 6,500rpm
Torque: 370Nm from 1,500-3,500rpm
Transmission: 10-speed auto
Fuel consumption: 7.8L/100km
Price: from Dh94,900
On sale: now
The%20specs
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Mohammed bin Zayed Majlis
Company%20Profile
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Company%C2%A0profile
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What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
Killing of Qassem Suleimani
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
THE BIO: Mohammed Ashiq Ali
Proudest achievement: “I came to a new country and started this shop”
Favourite TV programme: the news
Favourite place in Dubai: Al Fahidi. “They started the metro in 2009 and I didn’t take it yet.”
Family: six sons in Dubai and a daughter in Faisalabad
SPECS
Mini John Cooper Works Clubman and Mini John Cooper Works Countryman
Engine: two-litre 4-cylinder turbo
Transmission: nine-speed automatic
Power: 306hp
Torque: 450Nm
Price: JCW Clubman, Dh220,500; JCW Countryman, Dh225,500
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What are the GCSE grade equivalents?
- Grade 9 = above an A*
- Grade 8 = between grades A* and A
- Grade 7 = grade A
- Grade 6 = just above a grade B
- Grade 5 = between grades B and C
- Grade 4 = grade C
- Grade 3 = between grades D and E
- Grade 2 = between grades E and F
- Grade 1 = between grades F and G
'Dark Waters'
Directed by: Todd Haynes
Starring: Mark Ruffalo, Anne Hathaway, William Jackson Harper
Rating: ****
RESULTS
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