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Fed to end Capital Relief for Banks

The Federal Reserve announced on Friday that it would not be extending capital buffers put in place last year to help banks during the pandemic.

Almost a year since the Fed made multiple rate cuts and introduced several measures to help the U.S. economy survive the pandemic, it seems they are ready to move away from some of these measures.

The first being the emergency capital relief for big banks, which was introduced to ease capital pressures on these institutions during the crisis.

From the end of March, the temporary change to the Fed’s supplementary leverage ratio, or SLR, for bank holding companies will expire. 

Shares in JP Morgan, Goldman Sachs and Citigroup were all down as of writing.

European Indices fall as new lockdown begins

Europe’s main indices traded lower to end the week as it was reported that several France, Germany and Italy could be set for further lockdowns.

Many believe that the continent could already be experiencing a third wave of cases, as infections climb to their highest level in months.

In France, the number of new coronavirus cases increased to above 25,000 this week, which is the first time since November.

As a result, certain parts of the country, including Paris have entered lockdown restrictions that commenced today.

Germany, which was set to further ease lockdown measures, is also reconsidering this move.

The country’s Health Minister Jens Spahn stated that, “The rising case numbers may mean that we cannot take further opening steps in the weeks to come”.

Both the DAX 30 and CAC 40 closed the week in red.

Nikkei 225 falls on BOJ announcement

The Bank of Japan moved in sync with the Fed and Bank of England today, by opting to keep interest rates unchanged.

In its latest Monetary Policy Meeting, the BOJ also stated that it would continue to buy equities up to a maximum of $110 billion per annum a year.

However, the bank will now only intervene when the market falls, rather than buying as a way to stimulate economic activity.

The BOJ stated that, “ The effects of equity purchases tend to be greater the higher the instability in financial markets. This suggests that large-scale purchases during times of heightened market instability are effective”.

Japan’s Nikkei 225 was down 1.41% on Friday.

Quote of the day – “Time is your friend; impulse is your enemy.”

– John Bogle

Eliman Dambell

Senior Market Analyst
edambell@tvmarkets.com

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