Sydney, April 27 (BNA): Asian stocks extended losses Thursday as problems at US First Republic Bank continued to spook investors amid fears that growth in the world’s largest economy could be too abrupt.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3% on Thursday, while Japan’s Nikkei lost 0.4%. China’s blue-chips were flat, but Hong Kong’s Hang Seng fell 0.3%, Reuters reported.
Geopolitics also cast a shadow over the markets. US Commerce Secretary Gina Raimondo said on Wednesday that Chinese cloud computing companies such as Huawei Cloud and the Alibaba Cloud division could pose a threat to US security and vowed to review an application to add them to an export control list.
But the tech giants bucked the gloom, with Nasdaq futures rising 0.4% in early Asian hours, as Facebook owner Meta rose 12% after its earnings beat the bell. Intel and Amazon will report their results later today.
Shares of Nomura 8604.T fell more than 7% early Thursday after Japan’s largest stockbroker posted a sharp drop in quarterly net profit after concerns about a global banking crisis roiled markets and hurt its investment banking business.
Overnight, in a brutal sell-off, First Republic Bank’s market capitalization briefly plunged as much as 41% to about $888 million, less than $1 billion for the first time, a far cry from its peak of over $40 billion in November 2021.
Investors are waiting to see if they can find buyers for the asset and engineer a turnaround after CNBC reported that US government officials are not currently ready to get involved.
“First Republic is a bank, and it looks like it won’t be any more than that soon. While the bank tries all manner of bailout strategies, it continues to slide relentlessly,” said Clifford Bennett, chief economist at ACC Securities.
“It’s a case of an incredibly shrinking bank. Until, in the end, it’s likely to simply cease to exist.”
Overnight, the Nasdaq gained 0.5% on technology, while the S&P 500 and Dow fell on weakness in economically sensitive sectors, hinting at growing recession fears.
Data showed that new orders for major capital goods manufactured in the United States fell more than expected in March, indicating that business spending on equipment was likely to be a drag on economic growth in the first quarter.
The Atlanta Fed’s Gross Domestic Product Now, which tracks how incoming data affects estimated GDP for the current quarter, shows the growth estimate is now 1.1% annually, down sharply from 2.5% just a week ago.
That suggests there could be downside risk to first-quarter GDP data in the United States, due later on Thursday, with analysts polled by Reuters expecting an expansion of 2%. Wells Fargo cut its forecast for US GDP growth by 100 basis points, to a rise of 0.8%.
Fed funds futures are pricing in a roughly 80% chance that the Fed will raise interest rates by 25 basis points at its May meeting next week, subject to expected rate cuts of 45 basis points by the end of the year.
In the currency markets, the movements have been largely muted. The euro was hovering near its highest level in more than a year at $1.104, benefiting from bets that the economic outlook for Europe could be on the upside after Germany raised its economic forecast for growth this year.
The dollar index, which measures the currency against six major competitors, fell to 101.4 amid fresh concerns about a slowdown in the United States.
US Treasuries were flat, with the two-year yield at 3.9345% and the 10-year at 3.4391%. Treasury yields fell for one month ahead of a possible vote in Washington on the US debt ceiling.
Oil regained some of its gains on Thursday after falling nearly 4% on recession fears. US crude futures rose 0.3% to $74.5 a barrel, while Brent crude futures rose 0.5% to $78.09 a barrel.
Gold was flat at $1,990.04 an ounce.
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