Dow futures rise 20 pts; banking sector tensions remain

At 7:00 ET (11:00 GMT), the Nasdaq 100 Futures rose 12 points or 0.1%, the S&P 500 Futures traded 4 points higher, and the Dow Futures contract was up 20 points or 0.1%.

U.S. markets are anticipated to open slightly higher on Monday thanks to an emergency liquidity operation led by the Fed and additional banking sector consolidation, but tensions are still there ahead of this week’s Federal Reserve meeting.

The massive Swiss bank UBS (SIX:UBSG) announced on Sunday that, with the help of the Swiss government, it would purchase rival Credit Suisse (SIX:CSGN) for about $3.3 billion.

Concerns about Credit Suisse’s survival had been growing as it faced growing liquidity difficulties.

Also, to reduce the stress on the world financial system, the Federal Reserve and several other senior central banks announced the provision of additional liquidity through the existing U.S. dollar swap line agreements.

Yet, tensions still exist, particularly since the UBS merger cost Credit Suisse’s junior bondholders $17 billion.

In the wake of Silicon Valley Bank’s failure earlier this month, several smaller U.S. banks are still under pressure to strengthen their deposit bases.

Even though several banks committed to investing $30 billion in the troubled lender last week, First Republic Bank’s (NYSE:FRC) stock traded 15% down premarket Monday.

Investors will watch the U.S. authorities this week to see if additional steps are taken to reestablish trust in the banking industry.

Interest rates are anticipated to rise by 25 basis points at the Fed’s policy-setting meeting this week, a lesser increase than anticipated earlier in the month.

Investors will be watching for any indication of the possibility of future increases because officials had been anxious to stress the need for additional rate hikes to battle inflation before this banking crisis.

Due to worries that the prolonged banking crisis could negatively affect global economic activity and, in turn, petroleum demand this year, oil prices fell Monday to 15-month lows, following a significant selloff from the previous week.

According to a statement, during a weekend meeting with OPEC Secretary General Haitham al-Ghais, Iraqi Prime Minister Mohammed Shia’ Al Sudani emphasized the importance of coordination among oil-exporting countries to prevent excessive price fluctuations.

On April 3, the OPEC+ ministerial committee, which includes Russia as a producer ally, is scheduled to convene. On June 4, the full ministerial meeting is scheduled.

U.S. oil futures were trading 2% lower at $65.55 a barrel as of 07:00 ET, down from last week’s 13% decline, the biggest weekly drop since last April. The Brent contract experienced its worst weekly decline since December, falling over 12% last week before falling 2.2% to $71.35.

Moreover, the price of gold futures increased by 0.4% to $1,987.90/oz, and the EUR/USD traded 0.3% higher at 1.0699.