Gold Hits $2,000 As Markets Eye Fed Interest Rate Decision | Daily Market Analysis

Key events:        

• Australia – RBA Meeting Minutes     
• Canada – Core CPI (MoM) (Feb)
• Eurozone – ECB President Lagarde Speaks     
• USA – Existing Home Sales

Credit Suisse was sold to local rival UBS in a $3 billion deal that shocked bondholders by wiping out $17 billion in minority debt, prompting European supervisors to issue a statement that they would act differently. The U.S. stock market is holding up surprisingly well, as expectations of an earlier reversal in central bank policy support tech stocks in particular. Chinese leader Xi Jinping began yesterday a three-day visit to Moscow. And gold hit the $2,000 mark for the first time in 11 months, due to rising safe haven prices. Here's what traders and investors need to know today.

• UBS buys Credit Suisse for $3 billion; AT1 liquidation shocked junior bondholders

UBS Group agreed to buy Credit Suisse for $3 billion in a hasty deal brokered by Swiss authorities. Credit Suisse suffered a catastrophic loss of deposits last weekend and is the largest bank to collapse in a decade.

The controversial point here was that the regulator, FINMA, wrote off about $17 billion in minority debt, the so-called additional-tier bonds (AT1s) – even though shareholders were still allowed to receive some compensation. Although the move complied with Swiss law, it upset AT1 debt holders across Europe, causing bank stocks to plummet.

However, the move circumvented Swiss law by forcing the transaction without the approval of Credit Suisse shareholders. In this regard, according to some analysts, we should expect litigation.

• Fed is expected to raise rates tomorrow

The Fed has been silent for the past week. For example, the central bank made no important comments after the release of the higher-than-expected core CPI. While the week leading up to the meeting is a period of silence, it is usually a time to see speculation about the central bank's decision in the media, but this week there was nothing like that.

Because of this silence, we can only guess what decision the Fed will make. Nevertheless, if we analyze the comments of Fed policymakers over the past year, it is reasonable to assume that the central bank will continue to raise rates because the problems in the banking sector were expected for it. The Fed has probably known for months about large losses by banks on held-to-maturity assets. In hindsight, they seem obvious.

• The U.S. stock market ended Monday's trading higher

At the close on the New York Stock Exchange, the Dow Jones was up 1.20 percent, the S&P 500 was up 0.89 percent, and the NASDAQ Composite was up 0.39 percent.

Leading the decline were shares of First Republic Bank (NYSE: FRC), which fell 47.29% to close at 12.14. Microsoft Corporation (NASDAQ: MSFT) was down 2.58% to 272.23.

• Xi begins 3-day visit to Russia

Chinese leader Xi Jinping began a 3-day visit to Moscow.

Xi will have to find a balance between supporting his strategic ally, Russia, and confronting the U.S. and Europe, whose slowing economic growth is also bad news for China's export-sensitive economy.

Various reports, citing anonymous officials, report that Xi will hold talks with Ukrainian President Volodymyr Zelensky after meeting with Putin. China has recently felt its diplomatic prestige rise after an agreement under which Saudi Arabia and Iran will resume their diplomatic relations.

• Gold prices hit the $2000 mark amid another drop in oil prices

Gold prices surpassed $2,000 an ounce for the first time in 11 months as industrial commodities showed mixed performance on fears that financial instability will lead to a sharp slowdown in advanced economies later this year.