# Jittery markets attempt risk-on rally while waiting for Powell
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-22
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: European and Global Markets Update: Investors Anticipate Fed Policy Decision
Meta Description: Stay informed on the latest market trends and developments ahead of the Federal Reserve policy decision. Join Ankur Banerjee for insights on the market's
URL: https://financedigest.com/jittery-markets-attempt-risk-on-rally-while-waiting-for-powellhtml

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A look at the day ahead in European and global markets from Ankur Banerjee

With about 12 hours still to go before the Fed announces its policy decision, investors are attempting a bit of a risk-on rally.

Comments from U.S. Treasury Secretary Janet Yellen, who [told bankers that she was prepared to intervene to protect depositors in smaller banks](https://www.financedigest.com/uk-banks-and-insurers-told-to-step-up-help-for-struggling-customers.html "UK banks and insurers told to step up help for struggling customers"), have helped calm some of the market’s nerves, even as a scramble by embattled U.S. lender First Republic [Bank to secure a capital infusion kept worries about the sector](https://www.financedigest.com/sterling-rises-as-receding-bank-sector-worries-lift-sentiment.html "Sterling rises as receding bank sector worries lift sentiment") alive.

The collapse of [Silicon Valley Bank](https://www.financedigest.com/exclusive-u-s-regulator-seeks-sale-of-silicon-valley-bank-signature-bank-portfolios-sources.html "Exclusive-U.S. regulator seeks sale of Silicon Valley Bank, Signature Bank portfolios-sources"), 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.

And that brings us to the main event of the day: the [Fed’s policy](https://www.financedigest.com/asian-shares-rise-dollar-dips-ahead-of-fed-policy-decision.html "Asian shares rise, dollar dips ahead of Fed policy decision") meeting, which concludes on Wednesday with the 2 p.m. EDT (1800 GMT) release of a policy statement followed [half an hour](https://www.financedigest.com/payday-millionaires-brits-spend-nearly-half-43-of-their-disposable-income-within-24-hours-of-being-paid.html "PAYDAY MILLIONAIRES: Brits spend nearly half (43%) of their disposable income within 24 hours of being paid") later by a news conference by Chair Jerome Powell.

Traders are pricing in an 85% chance of a 25 basis-point interest [rate hike](https://www.financedigest.com/uk-economys-unexpected-bounce-spurs-more-boe-rate-hike-talk.html "UK economy’s unexpected bounce spurs more BoE rate hike talk") by the Fed and a 15% chance of no increase. Just a month earlier, the [market was pricing](https://www.financedigest.com/german-residential-property-market-faces-risk-of-price-drop-diw-study.html "German residential property market faces risk of price drop – DIW study") in a 24% chance of a 50 basis-point hike.

The past two weeks have upended expectations, with [market funding](https://www.financedigest.com/explainer-why-european-money-market-funds-inflows-are-lagging-behind-the-u-s-torrent.html "Explainer-Why European money market funds inflows are lagging behind the U.S. torrent?") 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.

Whether that’s enough for central [banks to stop hiking](https://www.financedigest.com/bank-of-englands-mann-doubles-down-on-backing-for-rate-hikes.html "Bank of England’s Mann doubles down on backing for rate hikes") remains to be seen.

The MSCI ex-Japan index rose 1.3%, while the [dollar and gold](https://www.financedigest.com/stocks-and-gold-cheer-u-s-inflation-picture-while-dollar-slides.html "Stocks and gold cheer U.S. inflation picture, while dollar slides") traded in narrow ranges. Futures indicated European [stocks would likely join in on the rally](https://www.financedigest.com/asian-stocks-rally-as-bank-jitters-calm-alibaba-lifts-mood.html "Asian stocks rally as bank jitters calm, Alibaba lifts mood").

In the corporate world, GameStop posted a surprise profit for the fourth quarter, its first [since early](https://www.financedigest.com/first-quarter-dash-for-cash-largest-since-early-2020-bofa.html "First quarter ‘dash for cash’ largest since early 2020 -BofA") 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](https://www.financedigest.com/what-is-a-hedge-fund.html "What Is A Hedge Fund") fund Hudson Bay Capital Management. The retailer [reached an amended agreement](https://www.financedigest.com/adnami-signs-agreements-with-schibsted-and-amedia-to-deliver-high-impact-ads-with-unparalleled-reach-across-the-nordics.html "Adnami signs agreements with Schibsted and Amedia to deliver high impact ads with unparalleled reach across the Nordics") with Hudson last week to temporarily lower the stock price threshold to $1 until April 3. Graphic: Traders bet on rate hike as fears of bank [crisis](https://www.financedigest.com/how-the-2023-banking-crisis-unfolded.html "How the 2023 banking crisis unfolded") ease Traders bet on rate hike as fears of bank crisis ease, https://www.reuters.com/graphics/USA-RATES/FEDWATCH/xmpjkbnxmvr/chart.png

Key [developments that could influence markets](https://www.financedigest.com/concrete-placing-booms-market-notable-developments-geographical-outlook.html "Concrete Placing Booms Market: Notable Developments & Geographical Outlook") on Wednesday:

Economic events: UK inflation, US [Fed policy decision](https://www.financedigest.com/wage-data-dents-dollar-recovery-before-fed-rate-decision.html "Wage data dents dollar recovery before Fed rate decision") (This story has been corrected to say that the market is pricing in 85% chance of 25 bps hike and 15% chance of no increase in paragraph 5)

(Reporting by Ankur Banerjee; Editing by Edmund Klamann)


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