Beijing, March 20 (BNA): Asian stock markets tumbled after Swiss authorities arranged the takeover of troubled Credit Suisse amid fears of a global banking crisis ahead of the Federal Reserve meeting to decide on possible further rate hikes.
Hong Kong, Tokyo and Sydney prices fell. Shanghai rose.
Oil prices fell, the Associated Press reported.
Swiss authorities have announced that UBS will take over its smaller rival as regulators try to calm concerns about banks in the wake of the collapse of two US banks.
Central banks announced concerted efforts to stabilize lenders, including a facility to borrow US dollars if needed.
Investors are concerned that banks are cracking under the pressure of unexpectedly large interest rate hikes over the past year to cool economic activity and inflation.
This caused the prices of bonds and other assets on their books to drop, raising concerns about the financial health of the industry.
Investors are waiting to see where the dust settles in the banking saga before making any bold moves, Stephen Innes of SPI Asset Management said in a report.
Hong Kong’s Hang Seng fell 2.5% to 19023.69 and Tokyo’s Nikkei 225 fell 1.1% to 27030.90.
The Shanghai Composite Index rose 0.1% to 3,254.81.
The Kospi Index in Seoul fell 0.4% to 2387.06 and the S&P-ASX 200 in Sydney lost 1.2% to 6913.80.
New Zealand and Southeast Asian markets also declined.
The Swiss government said UBS will take over Credit Suisse for approximately $3.25 billion after a plan for the troubled lender to borrow up to $54 billion from the Swiss central bank failed to reassure investors and customers.
US regulators have also sought to allay concerns about threats to banking systems.
The Fed said that illiquid banks borrowed about $300 billion from the Fed in the week through Thursday.
Separately, the New York Community Bank has agreed to buy a significant portion of failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corporation said late Sunday.
The FDIC said $60 billion in Signature Bank loans will remain in receivership and is expected to be sold in due course.
He raised concerns about other lenders who were too fragile to finance.
Credit Suisse is among the 30 institutions recognized as systemically important banks worldwide. Before the takeover, the benchmark S&P 500 on Wall Street lost 1.1% on Friday, to 3,916.64.
First Republic Bank shares fell by 33 percent, bringing their prices down during the week to 71.8 percent.
The Dow Jones Industrial Average lost 1.2%, to 31,861.98. The Nasdaq Composite Index fell 0.7 percent to 11,630.51.
Unexpectedly large and rapid increases by the Federal Reserve and other central banks to quell inflation near multi-decade highs sent prices of bonds and other assets on their books lower.
Traders expect last week’s turmoil to prompt the Fed to limit its rate hike at this week’s meeting to 0.25 percentage point.
This will be the same as the previous increase and half of the margin that traders expected earlier.
Energy markets, the US benchmark crude fell 41 cents to $66.33 in electronic trading on the New York Mercantile Exchange.
The contract fell $1.61 on Friday to $66.74.
Brent crude, the price basis for global oils, fell 44 cents to $72.53 a barrel in London.
It fell $1.73 in the previous session to $72.97.
The dollar rose to 132.03 yen from 131.67 yen on Friday.
The euro fell to $1.0667 from $1.0681.
NAA