Equity markets have spent the last month moving in a relatively narrow range. There seem to be multiple headwinds. Even before the regional banking crisis in the US, higher interest rates have curbed the demand for credit, while core inflation remains stubbornly high.

Fears of a banking crisis faded, with large US and European banks announcing sizeable first quarter profits. However, US investment bank JPMorgan Chase was forced into an emergency rescue of California-based regional lender First Republic Bank.

After the turbulent days of early March, markets now seem to view the banking crisis as a small number of idiosyncratic events. And yet a broader credit squeeze remains a possibility, which could rein in economic growth.