Asian shares mixed after weekend lull in bank worries

PTI, Mar 27, 2023, 11:52 AM IST

Representative image (Source: Shutterstock)

Bangkok: Asian shares were mixed on Monday after stocks on Wall Street shook off a weak start to end higher on Wall Street last week despite persisting worries over banks on both sides of the Atlantic.

Coming off a lull in fresh news of troubles over the weekend, benchmarks slipped in Hong Kong, Shanghai, Seoul and Taiwan but rose in Tokyo and Sydney.

US futures gained and oil prices were little changed.

Concerns that higher interest rates are squeezing lenders have revived fears of recession and raised uncertainty about policies of the Federal Reserve and other central banks.

On Friday, news about Deutsche Bank’s credit default swaps was the latest big news to shake the markets.

“This is keeping financial stocks pressured with traders on the lookout for any other potential pockets of trouble in the global financial system,” Tim Waterer, an analyst at Kohle Capital Markets, said in a commentary.

Given recent market gains, “it’s fair to say that traders are putting on a brave face despite no assurances that we have seen the last of the banking sector woes,” he said.

The managing director of the International Monetary Fund, Kristalina Georgieva, told a conference in Beijing on Sunday that risks to financial stability have risen as interest rates are raised to fight inflation.

She said actions by central banks and other regulators have helped to ease strains on markets, “but uncertainty is high, which underscores the need for vigilance.”

Chinese markets declined on Monday after the government reported that industrial profits fell nearly 23 per cent in the first two months of the year from a year earlier.

Hong Kong’s Hang Seng gave up 0.5 per cent to 19,815.03 and the Shanghai Composite index lost 1.1 per cent to 3,231.28.

Tokyo’s Nikkei 225 added 0.4 per cent to 27,501.60 and the Kospi in Seoul shed 0.3 per cent to 2,408.58. Australia’s S&P/ASX 200 edged 0.2 per cent higher, to 6,969.20 and the Sensex in Mumbai gained 0.4 per cent.

Shares edged higher in Bangkok.

On Friday, the S&P 500 rose 0.6 per cent, marking its second straight weekly gain, to close at 3,970.99. The Dow Jones Industrial Average added 0.4 per cent to 32,237.53 and the Nasdaq composite climbed 0.3 per cent to 11,823.96. The Russell 2000 index rose 0.9 per cent to 1,734.92.

Investors are focused on what the Federal Reserve and other central banks will do with interest rates going forward after the recent spate of turmoil in the banking sector.

Deutsche Bank ‘s stock tumbled 8.5 per cent in Germany on Friday and shares of other major European banks suffered smaller declines. Earlier this month, shares of and faith in Swiss bank Credit Suisse, which has its own unique set of troubles, fell so much that regulators brokered a takeover of it by rival UBS.

The second- and third-largest US bank failures in history earlier this month, of Silicon Valley Bank and Signature Bank, have cast a harsher spotlight across the entire banking industry. Investors have zeroed in on smaller and midsized banks, the ones below in size of the “too-big-to-fail” banks and seen as greater risks.

Pressure on lenders could hinder lending to small and midsized businesses across the country. That in turn could lead to less hiring, a weaker economy and a higher potential for a recession that many economists already saw as likely.

Friday’s reports on the economy came in mixed, with orders for long-lasting manufactured goods slower last month than economists expected while business activity showed the fastest uptick in almost a year, according to a preliminary report from S&P Global.

In other trading, US benchmark crude oil picked up 2 cents to USD 69.28 per barrel in electronic trading on the New York Mercantile Exchange. It lost 70 cents to USD 69.26 on Friday.
Brent crude, the pricing basis for international trading, lost 3 cents to USD 74.55 in London.

The US dollar rose to 130.64 Japanese yen from 130.57 yen. The euro weakened to USD 1.0771 from USD 1.0774.

(AP)