TOKYO (AP) — Asian shares were mixed Thursday following a rally on Wall Street as worries over banks following the collapses of several lenders in recent weeks eased further.
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 0.8% to 27,662.54. Australia's S&P/ASX 200 added 0.9% to 7,110.20. South Korea's Kospi rose 0.2% to 2,449.45. Hong Kong's Hang Seng lost 0.7% to 20,048.99, while the Shanghai Composite declined 0.2% to 3,232.39.
“Fading concern about the banking sector is also supporting risk assets as the end of the month and quarter approaches,” Anderson Alves of ActivTrades said in a commentary.
On Wall Street, the S&P 500 rose 1.4% to 4,027.81, for its fourth gain in the last five days. The Dow Jones Industrial Average climbed 1% to 32,717.60, while the Nasdaq composite jumped 1.8% to 11,926.24.
The month has being dominated by worries about banks and whether the industry is cracking under the pressure of much higher interest rates.
But by Wednesday, a measure of fear among stock investors on Wall Street had fallen to nearly where it was on March 8, the day before Silicon Valley Bank’s customers suddenly yanked out $42 billion in a panicked dash. It became the second-largest U.S. bank failure in history and sparked harsher scrutiny of banks around the world.
“I think the market has been very much focused on a set of extremes, like what we saw in the COVID period, where it was either: The sky is falling, or everything is euphoric,” said Zach Hill, head of portfolio management at Horizon Investments.
Regulators in Switzerland brokered a takeover of Credit Suisse by its bigger rival, UBS. UBS said Wednesday 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 Wednesday. Some banks hit hardest in recent weeks rose sharply. First Republic Bank jumped 5.6%, and PacWest Bancorp. gained 5.1%.
The Federal Deposit Insurance Corp. announced the sale of much of Silicon Valley Bank's assets early this week. Regulators have also announced programs 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.
But the Fed has hinted it sees one more hike before holding rates steady through this year and many Wall Street professionals take it at its word, saying rate cuts would likely come more quickly only if the economy is in serious trouble.
For now, a resilient job market has been holding up the economy, even as parts of it weaken under higher interest rates. Most of Wall Street will soon begin reporting how much profit they made in the first three months of the year under such conditions.
In energy trading, benchmark U.S. crude fell 29 cents to $72.68 a barrel. Brent crude, the international standard declined 39 cents to $77.89 a barrel.
In currency trading, the U.S. dollar slipped to 132.68 Japanese yen from 132.75 yen. The euro cost $1.0827, inching down from $1.9847.
AP Business Writer Stan Choe contributed.
Yuri Kageyama, The Associated Press