Tokyo, Mar 28: Asian shares were mostly higher on Tuesday as investors got some relief from worries over troubled US banks with a planned takeover of failed Silicon Valley Bank.
Japan’s benchmark Nikkei 225 lost 0.1 per cent to 27,456.98. Australia’s S&P/ASX 200 jumped 1.1 per cent to 7,036.20.
South Korea’s Kospi added 0.4 per cent to 2,419.43.
Hong Kong’s Hang Seng rose nearly 0.4 per cent to 19,644.68, while the Shanghai Composite inched up less than 0.1 per cent to 3,249.39.
“Asian equities were positive on Tuesday, lifted by mostly higher major indices in the previous session. Receding fears surrounding the banking crisis and surging oil prices led to solid risk-taking flows,” Anderson Alves at ActivTrades said in a report.
Markets have been in turmoil following Silicon Valley Bank’s collapse, the second-largest US bank failure in history, earlier this month, and then the third-largest failure, by New York-based Signature Bank.
Investors have been hunting for which banks could be next to fall as the system creaks under the pressure of much higher interest rates.
On Wall Street, the S&P 500 eked out a 0.2 per cent gain to 3,977.53 after having been up by as much as 0.8 per cent. Banks and energy stocks led the gainers in the benchmark index, outweighing losses in technology and communications companies.
The Dow Jones Industrial Average rose 0.6 per cent to 32,432.08, while the Nasdaq composite fell 0.5 per cent, to 11,768.84, reflecting losses in Google parent Alphabet and other tech companies. Gainers outnumbered decliners on the New York Stock Exchange by nearly 3-1. The S&P and Nasdaq are coming off two straight weekly gains.
First Citizens Bank’s stock soared 53.7 per cent after it said it would buy most of Silicon Valley Bank, whose failure sparked the industry’s furor earlier this month.
As part of the deal, the Federal Deposit Insurance Corp. Agreed to share some of the losses that may arise from some of the loans First Citizens is buying.
Other banks that investors have highlighted as the next potential victims of a debilitating exodus of customers also strengthened.
First Republic Bank jumped 11.8 per cent and PacWest Bancorp rose 3.5 per cent. Most of the focus in the US has been on banks that are below the size of those that are seen as “too big to fail.”
A broader worry has been that all the weakness for banks could cause a pullback in lending to small and midsized businesses across the country.
That in turn could lead to less hiring, less growth and a higher risk of a recession. Many economists were already expecting an economic downturn before all the struggles for banks.
“Unfortunately this is what happens when you tighten policy that quickly,” Amanda Agati, chief investment officer of PNC Asset Management Group, said about the past year’s swift rise in interest rates. “Things break in the system. Some of the weakest links are starting to show up.”
The Federal Reserve has pulled its key overnight rate to a range of 4.75 per cent to 5 per cent, up from virtually zero at the start of last year. It indicated last week that the troubles in the banking system could end up acting like rate hikes on their own, by slowing lending.
Huge, quick swings in expectations for the Fed have caused historic-sized moves in the bond market.
Yields jumped Monday in their latest lunge. The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, rose to 3.53 per cent from 3.37 per cent late Friday. It was above 4 per cent earlier this month.
Lower rates can act like steroids for stocks, and technology and other high-growth stocks tend to get a particularly big boost. That has helped the S&P 500, which is dominated by such Big Tech stocks as Apple and Microsoft.
Other areas of the market that don’t benefit from such Big Tech stocks have been weaker. The Russell 2000 index of smaller stocks, for example, is on track for a 7.6 per cent loss this month versus a 0.2 per cent gain for the S&P 500.
The Russell outgained the broader market Monday, however, adding 1.1 per cent, to 1,753.67.
In energy trading, benchmark US crude lost 2 cents to USD 72.79 a barrel in electronic trading on the New York Mercantile Exchange. It gained USD 3.55 to USD 72.81 per barrel on Monday.
Brent crude, the international standard, fell 21 cents to USD 77.91 a barrel.
In currency trading, the US dollar fell to 130.62 Japanese yen from 131.56 yen. The euro cost USD 1.0813, up from USD 1.0804. (AP)
Follow our WhatsApp channel
