The Ides of March

By Greg Smith, Head of Retail at Devon Funds

Concerns over contagion following the implosion of Silicon Valley Bank (and a couple of others at the “pointier” end of the spectrum) were quickly neutralised by US officials. Across the Atlantic, officials acted equally swiftly to reassure over the state of the European banking sector, with a hastily arranged rescue takeover of Credit Suisse by fellow Swiss peer UBS.  

Central banks were also in the spotlight on a number of counts, with questions raised over whether problems in the banking sector were by-products of overly fast and furious rate-hiking initiatives. Any introspection by the central banks came as several signalled they were nearing the end of their interest rate tightening journeys. Indeed, the central banks in Canada and Australia were notable for both hitting the pause button.
In what was a volatile month, a semblance of calm prevailed, particularly in the US where the S&P500 gained 3.7%, while the Nasdaq jumped 6.7%. The kiwi and Australian markets were relatively weaker, with the NZX50 dipping 0.1%, and the ASX200 edging 0.2% lower during the course of the month. While central banks in the Northern Hemisphere had already shown their hands, there was an air of anticipation over recent rate decisions by the RBA and RBNZ - the reactions proved somewhat different. 

Ultimately central bank meetings were held in much calmer settings than would have been the case a few weeks earlier. Authorities on both sides of the Atlantic acted swiftly to reduce the risk of contagion or a lack of confidence in the banking sector.