Equities were lower on Thursday morning, with the U.S. And turmoil at Credit Suisse on the back of Europe’s lows led to a renewed sell-off in the banking sector.
Japan’s Topix was down 1.3 percent, South Korea’s Kospi was down 0.1 percent and Australia’s S&P/ASX 200 was down 1.5 percent. Hong Kong’s Hang Seng and China’s CSI 300 fell 1.3 percent and 0.5 percent, respectively.
Japanese bank stocks resumed selling, with the Topix Banks Index down 3.7 percent. Regional lenders Tochigi Bank and Keio Bank were the hardest hit, with losses of 5.4 percent and 3.6 percent, respectively.
Investors on Wall Street resumed selling off bank shares on Wednesday, as a fall in equity and bond values at troubled lender Credit Suisse refocused investor fears about lenders’ bond portfolios around the world.
That was despite gains on Tuesday as fears of contagion from the collapse of technology-focused lender Silicon Valley Bank eased.
The S&P 500 closed down 0.7 percent on Wednesday, while the Nasdaq Composite ended flat on Wednesday. JPMorgan Chase, the world’s largest bank by assets, fell 4.7 percent, while Morgan Stanley and Citibank both lost more than 5 percent. The KBW Nasdaq Bank Index closed down 3.6 percent.
San Francisco-based First Republic Bank, the hardest hit by SVB’s collapse, lost 21.4 percent.
Credit Suisse then announced on Thursday that it would borrow up to $54bn from the Swiss central bank and buy about $3bn of debt to stave off a crisis engulfing the bank, whose shares closed 24.2 per cent lower on Wednesday.
European markets reacted positively to the news, with futures contracts for the Euro Stoxx 50 and FTSE 100 up 2.2 percent and 1.2 percent respectively. Contracts for Wall Street’s S&P 500 added 0.5 percent.
The yield on two-year US Treasury notes, which is closely linked to interest rate expectations, rose 0.02 percentage point to 3.99 percent during Asian trading on Thursday, after falling 0.31 percent a day earlier. The yield on the 10-year note also rose 0.02 percent to 3.51 percent. Yields move inversely with prices.
Turmoil in the banking sector has fueled expectations that the US Federal Reserve will have to reverse course and ease its aggressive strategy of interest rate hikes.
