BANGKOK (AP) – Asian shares were mixed yesterday 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.
United States (US) futures and oil prices were higher after the Federal Deposit Insurance Corp said it agreed to the sale of troubled Silicon Valley Bank (SVB) to North Carolina-based First-Citizens Bank & Trust Co. The FDIC took over Silicon Valley Bank after it collapsed on March 10, promising to protect all depositors.
The acquisition could raise confidence in the troubled banking industry after failures at SVB and two other banks rattled investors, driving lenders’ share prices sharply lower. But concerns persist that higher interest rates that are squeezing lenders could increase the likelihood of a recession. The troubles in the banking industry also have added to uncertainty about policies of the Federal Reserve and other central banks.
“This is keeping financial stocks pressured with traders on the lookout for any other potential pockets of trouble in the global financial system,” analyst Tim Waterer 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 (IMF) 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 yesterday 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 skidded 1.3 per cent to 19,667.66 and the Shanghai Composite index lost 0.4 per cent to 3,251.40.
Tokyo’s Nikkei 225 added 0.3 per cent to 27,476.87 and the Kospi in Seoul shed 0.2 per cent to 2,409.22. Australia’s S&P/ASX 200 edged 0.1 per cent higher, to 6,962.00 and the Sensex in Mumbai gained 0.6 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 focussed 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.
