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Asia stocks mostly rise after Wall St rally, bank fears ease

TOKYO (AP) – Asian shares were mostly higher yesterday following a rally on Wall Street as worries over banks following the collapses of several lenders in recent weeks receded.

Forceful actions by regulators have helped to calm markets as investors have turned their focus to how central banks might adjust their interest rate policies to reflect persisting worries over how higher rates might affect lenders.

Japan’s benchmark Nikkei 225 shed 0.5 per cent to 27,740.58. Australia’s S&P/ASX 200 added 1.0 per cent to 7,122.30. South Korea’s Kospi rose 0.7 per cent to 2,459.73.

Hong Kong’s Hang Seng gained 0.4 per cent to 20,266.96, while the Shanghai Composite advanced 0.6 per cent to 3,259.64 after China’s new Number Two leader, Premier Li Qiang, said the recovery from a long slowdown picked up pace in March.

The economy showed “encouraging momentum of rebounding” in January and February, Li said at the Boao Forum for Asia, a gathering of businesspeople and politicians on the southern island of Hainan.

“The situation in March is even better,” he said.

On Wall Street, the S&P 500 rose 1.4 per cent on Wednesday to 4,027.81, for its fourth gain in the last five days. The Dow Jones Industrial Average climbed one per cent to 32,717.60, while the Nasdaq composite jumped 1.8 per cent to 11,926.24.

A pedestrian passes by the Hong Kong Stock Exchange electronic screen. PHOTO: AP

The month has being dominated by worries about banks and whether the industry is cracking under the pressure of much higher interest rates.

But a measure of fear among stock investors on Wall Street has fallen to nearly where it was on March 8, the day before Silicon Valley Bank’s customers suddenly yanked out USD42 billion in a panicked dash. It became the second-largest US bank failure in history and sparked harsher scrutiny of banks around the world.

After regulators in Switzerland brokered a takeover of Credit Suisse by rival UBS, UBS said it’s bringing back its former CEO, Sergio Ermotti, to help it absorb Credit Suisse. Ermotti led a turnaround at UBS following the 2008 financial crisis.

On Wall Street, nearly all of the financial stocks in the S&P 500 rose on Wednesday. Some banks hit hardest in recent weeks rose sharply. First Republic Bank jumped 5.6 per cent, and PacWest Bancorp gained 5.1 per cent.

The Federal Deposit Insurance Corp announced the sale of much of Silicon Valley Bank’s assets early this week. Regulators have also announced programmes to help banks raise cash and indicated support for depositors in case of crisis.

The path ahead for the Federal Reserve and other central banks has become much more difficult because of the banking industry’s struggles. Typically, the still-high inflation seen around the world would call for even higher interest rates. But that would risk more pressure on banks, which could pull back on lending and squeeze the economy.

Traders are largely betting the Fed will have to cut rates as soon as this summer, something that can act like steroids for markets.

That’s helped Big Tech and other high-growth stocks in particular, which are seen as some of the biggest beneficiaries of lower rates.

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