Worries over the banking crisis are boosting disparate assets, with traditional safe-havens such as gold, Treasuries and money markets seeing high demand along with more speculative instruments such as tech stocks and bitcoin.
A trader wearing a protective face mask walks, as the global outbreak of the coronavirus disease continues, at the New York Stock Exchange in the financial district of New York, U.S., November 19, 2020. REUTERS/Shannon Stapleton/File Photoare boosting disparate assets, with traditional safe-havens such as gold, Treasuries and money markets seeing high demand along with more speculative instruments such as tech stocks and bitcoin.
As a result, some assets that typically struggle when central banks are expected to tighten monetary policy are now holding strong: The S&P 500 tech sector is up around 2% since March 8, the day Silicon Valley Bank's troubles became apparent, compared with a 1% decline in the broad S&P 500 index. Bitcoin, which fell 60% as rates were rising in 2022, has gained nearly 30% since March 8.
"I'm not surprised that we're getting confusing signals because this is a very confusing moment," said Christopher Smart, chief global strategist at Barings. "Investors are very unsure about what comes next."Looming over the market gyrations is the Fed’s two-day policy meeting that concludes on Wednesday. Earlier this month, investors were bracing for a hefty 50 basis-point rate hike as the central bank continued to stressto tame inflation.
Morgan Stanley strategist Michael Wilson put forward a similarly cautious view, recommending that investors stay away from tech shares and go with defensive names in anticipation of heightened volatility.
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