Central banks shrugged off the banking turmoil for now.

North American stock markets managed to advance despite the uncertainties in the banking sector, hot inflation, and central banks continuing to increase interest rates. S&P 500 and Nasdaq added 1.01% and 2.12% respectively and Canada’s S&P/TSX composite finished almost flat last week.

The banking turmoil caused by record-high interest rates, initiated in the US with Silicon Valley Bank and the contagion spread to Credit Suisse in Europe. The Swiss National Bank offered liquidity support for the struggling bank and the situation was contained with the big Swiss rival, UBS, purchasing Credit Suisse.

The market stayed on edge and then the news of the selloff of the German Deutsche Bank caused another round of concern which remains to be seen how it unfolds in the coming days. 

Shrugging off the turmoil, Central banks across the world including European Central Bank and US Federal Reserve increased their policy rate to show their determination to control inflation. The move may be on point given that the inflation reports including the one from the UK showed that prices continue to increase in a rapid fashion.

Canada’s inflation report cooled down to 5.2% in February which is the lowest figure since April 2020 but still relatively high.