Global stocks mixed after Wall St rebounds from bank jitters

PTI, Mar 15, 2023, 4:40 PM IST

Representative Image (Source: Pixabay)

Beijing: World markets were mixed Wednesday after Asian stocks rebounded while Europe opened lower and Wall Street futures declined.

London and Frankfurt declined. Shanghai and Tokyo closed higher. Oil prices rose by USD 1 per barrel, recovering some of the previous day’s losses.

Wall Street’s benchmark S and P 500 index rose Tuesday as bank stocks recovered some of their losses caused by worries customers might pull out deposits following the collapse of two US lenders.

That was despite data showing prices rose 6per cent over a year ago in February, decelerating from the previous month’s 6.4per cent but above the Federal Reserve’s 2per cent target.

”Measures of stress in financial markets have eased back from their spike on Monday — but remain elevated,” said ING economists in a report.

In early trading, London’s FTSE 100 lost 0.6 per cent 7,591.73. The DAX in Frankfurt retreated 0.3 per cent to 15,188.30 and the CAC 40 in Paris declined 0.7 per cent to 7,094.06.

On Wall Street, the future for the benchmark S&P 500 index was up less than 0.1 per cent. That for the Dow Jones Industrial Average gained 0.2per cent.

On Tuesday, the S and P 500 rose 1.7 per cent and the Dow gained 1.1 per cent. The Nasdaq composite added 2.1 per cent.

Investors fear the Fed might respond to enduring upward pressure on prices by speeding up the pace of interest rate increases to dampen economic activity and inflation.

Those jitters were overshadowed by anxiety about the US financial system following the collapse of Silicon Valley Bank on Friday and Signature Bank on Sunday. President Joe Biden and regulators have tried to assure the public that risks are contained and deposits in other banks are safe.

Tuesday’s data showed core inflation, with volatile energy and food prices stripped out to show a clearer trend, was 0.5 per cent in February over the previous month, edging up from January’s 0.4 per cent gain.

The Fed pays close attention to core inflation in deciding on monetary policy.

The Fed faces a dilemma over how to respond when banks already are under strain after the fastest pace of rate hikes in a decade knocked down prices of their assets.

In Asia, the Shanghai Composite Index rose 0.6 per cent to 3,253.31 after Chinese economic activity improved in January and February but less than expected following the end of anti-virus controls.

Retail sales rose 3.5 per cent over a year earlier, rebounding from December’s 1 per cent contraction, government data showed. Factory output rose 2.4 per cent, up from 1.3 per cent.

The Nikkei 225 in Tokyo advanced less than 0.1 per cent to 27,229.48 after major Japanese companies announced they had agreed with unions to the biggest wage increases in almost two decades.

Low wages are seen as a major drag on economic growth in Japan, but fewer than one in five workers belongs to a union.

The Hang Seng in Hong Kong jumped 1.5 per cent to 19,539.87. The Kospi in Seoul surged 1.3 per cent to 2,379.72.

India’s Sensex shed 0.2per cent to 57,783.79. New Zealand and Southeast Asian markets advanced.

On Wall Street, First Republic Bank jumped 27 per cent on Tuesday after plunging 67.5 per cent over the prior three days. KeyCorp gained 6.9per cent, Zions Bancorp. rose 4.5per cent and Charles Schwab climbed 9.2 per cent.

The yield on a two-year Treasury, or the difference between the market price and the payout at maturity, climbed back to 4.21 per cent from 4.02 per cent late Monday, another huge move.

The yield on the 10-year Treasury jumped to 3.66 per cent from 3.55 per cent.

In energy markets, benchmark US crude rose USD 1.03 to USD 72.36 per barrel in electronic trading on the New York Mercantile Exchange.

The contract plunged USD 3.47 on Tuesday to USD 71.33. Brent crude, the price basis for international oil trading, advanced USD 1.08 to USD 78.53 per barrel in London. It lost USD 3.32 the previous day to USD 77.45.

The dollar gained to 134.68 yen from Tuesday’s 134.19 yen. The euro declined to USD 1.0726 from USD 1.0741.