(News Bulletin 247) – The New York Stock Exchange should open higher on Monday morning, with investors timidly returning to buying US stocks after the erratic trajectory of recent weeks.

Half an hour before the opening, the futures contracts on the main New York indices advance from 0.3% to 0.6%, announcing a start to the week in the green.

The US equity markets had gained between 1% and 2% last week, an increase that hides a bumpier course, in fact marked by the alternation of sessions of rise then fall.

After the sudden outbreak of fever and the return of volatility in early March, fear subsided but the markets have still not returned to the optimism seen before the correction in banking stocks.

Investor sentiment benefited on Monday from the announcement of the acquisition by the American bank First Citizens of all the deposits and loans of Silicon Valley Bank (SVB), which went bankrupt at the beginning of the month.

This news further allays fears that the difficulties of certain American regional banks will spread to the entire banking sector and cause a new financial crisis.

For many strategists, it would be wrong to consider recent events in the sector as the first signs of a serious global banking crisis.

‘We believe (…) that the high-profile banking crises of recent days are more a reflection of weak business models and more isolated questionable decisions than the systemic problems associated with the US subprime mortgage crises and the financial crisis of the euro zone which followed’, we react at Janus Henderson.

Investors nevertheless seem to be hesitant to take strong positions before the important meetings of the next few days, and especially the data on inflation which will be published on Friday.

While the PCE index, which will be unveiled with household income and spending, has every reason to slow down in March, against a background of ebbing energy prices, core inflation has interrupted its decline for three months, which justifies the Fed remaining on alert.

Weaker-than-expected inflation numbers would bolster the prospect of the institution’s rate-hike cycle coming to an end, and even the scenario of further interest rate cuts.

Overall, investors are confident that the strains that have emerged in the banking sector will help slow economic activity, so less action will be needed from the Fed to tighten financial conditions sufficiently.

‘As a result, the Fed is likely nearing the end of the bullish cycle,’ say Pimco economists.

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