Asian stocks were mixed Monday in a cautious start to what could be another rocky week for global markets after a rout in banking shares renewed fears for the sector.
Hong Kong and Shanghai dipped, while Tokyo, Sydney and Singapore rose, following a positive finish on Wall Street last week.
The US Federal Deposit Insurance Corporation (FDIC) announced during Asian trade that First Citizens had agreed to buy Silicon Valley Bank, whose collapse this month had sparked fears of a global contagion in the banking sector.
US President Joe Biden and European officials had sought to calm investors as banking shares tumbled on Friday, triggered by concerns over troubled lender Deutsche Bank.
German Chancellor Olaf Scholz assured traders that Deutsche Bank is “very profitable” after its shares nosedived by as much as 14 percent, before closing 8.5 percent lower.
The German bank returned to financial health last year following a major restructuring after years of problems.
Clifford Bennett, chief economist at ACY Securities, said Monday it was unlikely the German government would allow Deutsche Bank to collapse or face restructuring.
But it showed “the continuing and growing pressure on the banking system among the major Western economies”, he wrote in a note.
“No bank is immune in the current climate. The forces that lead to the crisis so far seen, of higher rates and depositor uncertainty, only continue to grow.”
Markets had rallied last week after financial authorities acted to prevent contagion from the collapse of US regional lenders this month.
But sentiment soured following decisions by central banks in the United States, Britain and Switzerland to hike interest rates, despite concerns about the impact of the monetary tightening on banks.
Amir Anvarzadeh of Asymmetric Advisors said markets would “remain in a state of flux as concerns about the health of the global banking system persist”.
At the same time, “the market seems to have come to the view that the latest banking turmoil will do much of the work in taming inflation and chances for easier monetary policy this year have dramatically increased”, he said.
– Key figures around 0650 GMT –
Tokyo – Nikkei 225: UP 0.3 percent at 27,476.87 (close)
Hong Kong – Hang Seng Index: DOWN 1.1 percent at 19,690.05
Shanghai – Composite: DOWN 0.5 percent at 3,248.97 (close)
Euro/dollar: DOWN at $1.0761 from $1.0764 on Friday
Pound/dollar: FLAT at $1.2230
Euro/pound: UP at 87.98 pence from 87.96 pence
Dollar/yen: UP at 131.16 yen from 130.70 yen
West Texas Intermediate: FLAT at $69.96 per barrel
Brent North Sea crude: UP 1.0 percent at $75.71 per barrel
New York – Dow: UP 0.4 percent at 32,237.53 (close)
London – FTSE 100: DOWN 1.3 percent at 7,405.45 (close)
