Tokyo, March 30 (BNA): Asian stocks were mixed on Thursday after a rally on Wall Street as worries about banks eased after several lenders collapsed in recent weeks.
Strong action by regulators helped calm markets as investors shifted their focus to how central banks might adjust their interest rate policies to reflect ongoing concerns about how higher rates will affect lenders.
Japan’s Nikkei 225 fell 0.8% to 27,662.54. Australia’s S&P/ASX 200 rose 0.9% to 7,110.20. South Korea’s Kospi index rose 0.2 percent to 2,449.45. Hong Kong’s Hang Seng fell 0.7% to 20,048.99, while the Shanghai Composite fell 0.2% to 3,232.39.
“Fading concern over the banking sector is also supportive of risky assets as we approach the end of the month and quarter,” Anderson Alves of ActivTrades said in a comment.
On Wall Street, the S&P 500 rose 1.4% to 4,027.81, its fourth gain in the past five days. The Dow Jones Industrial Average rose 1% to 32,717.60, while the Nasdaq Composite jumped 1.8%, to 11,926.24.
The month was dominated by concerns about banking and whether the industry is cracking under the pressure of higher interest rates, according to the Associated Press (AP).
But by Wednesday, the measure of fear among Wall Street equity investors had dropped to roughly where it was on March 8, the day before Silicon Valley bank clients suddenly withdrew $42 billion in a panicked rush. It became the second largest US bank failure in history and sparked tougher scrutiny of banks around the world.
said Zack Hill, head of portfolio management at Horizon Investments.
Swiss regulators brokered the takeover of Credit Suisse by its biggest rival, UBS. UBS said on Wednesday it was bringing back its former CEO, Sergio Ermotti, to help him absorb Credit Suisse. Ermotti led a turnaround at UBS after the 2008 financial crisis.
On Wall Street, almost all financial stocks in the S&P 500 rose on Wednesday. Some of the hardest-hit banks in recent weeks have risen sharply. First Republic Bank jumped 5.6 percent and Backwest Bancorp 5.1 percent.
The Federal Deposit Insurance Corporation announced the sale of much of the Silicon Valley bank’s assets earlier this week. Regulators also announced programs to help banks raise cash and indicated support for depositors in the event of a crisis.
The path for the Fed and other central banks is made more difficult by the struggles of the banking industry. Typically, the still high inflation around the world requires higher interest rates. But that would risk putting more pressure on banks, which could cut back on lending and put pressure on the economy.
Traders are largely betting that the Federal Reserve will have to cut interest rates as soon as this summer, something that could act as a stimulant for the markets. This has helped big tech companies and other high-growth stocks in particular, which are seen as some of the biggest beneficiaries of lower interest rates.
But the Fed has hinted that it sees another increase before keeping interest rates steady through this year and many Wall Street professionals are taking it seriously, saying rate cuts are likely to come more quickly only if the economy is in serious trouble.
For now, the flexible labor market is holding back the economy, even as parts of it weaken under high interest rates. Most of Wall Street will soon start reporting how much you made in the first three months of the year under these conditions.
In energy trading, US benchmark crude fell 29 cents to $72.68 a barrel. International benchmark Brent crude fell 39 cents to $77.89 a barrel.
In currency trading, the US dollar fell to 132.68 yen from 132.75 yen. The price of the euro reached $1.0827, down slightly from $1.9847.
HF