Asian stocks fall after Wall Street plummets on fresh bank fears

BEIJING – Asian stock markets plummeted Thursday after Wall Street collapsed Credit Suisse stock crash revived concerns about a possible banking crisis following the collapse of two US lenders.

Shanghai, Tokyo, Hong Kong and Sydney slid as Asian bank stocks fell, erasing Wednesday’s gains. Oil prices rose.

Wall Street’s benchmark S&P 500 slipped 0.7% on Wednesday after temporarily falling as much as 2.1% after Credit Suisse stock fell 30%. This fueled jitters about global banks, which are under pressure from rate hikes by the Federal Reserve and other central banks to cool inflation.

Credit Suisse’s decline “shakes already weak investor sentiment,” Mizuho Bank’s Venkateswaran Lavanya said in a report.

Tokyo’s Nikkei 225 was down 0.9% to 26,998.07. Mizuho Bank fell 3.9%, while Japan’s No. 5 bank Resona Holdings fell 4.8%.

Hong Kong’s Hang Seng lost 1.4% to 19,271.65. Standard Chartered Plc lost 2.5% and HSBC lost 2.5%.

The Shanghai Composite Index slipped 0.5% to 3,245.65 after government data on Wednesday showed China’s economy is recovering at a slower-than-expected pace after anti-virus controls were lifted.

China’s banks are not facing the same pressures as foreign lenders as Beijing has kept interest rates steady since mid-2022 and sealed off the country from global capital flows. The state-owned Industrial & Commercial Bank of China, Ltd. and the Bank of China, Ltd. increased by 0.1%.

Seoul’s Kospi was down 0.2% to 2,375.69 and Sydney’s S&P ASX 200 was down 1.4% to 6,969.30.

On Wall Street, the S&P 500 fell to 3,891.93. The Dow Jones Industrial Average lost 0.9% to 31,874.57 after falling more than 2% at one point. The Nasdaq Composite recovered from a sharp decline to close 0.1% at 11,434.05.

Markets recouped some of their losses on Wednesday after the Swiss central bank said it could provide support to Credit Suisse “if needed”.

On Thursday, Credit Suisse said it would borrow up to $54 billion from the central bank.

Credit Suisse has struggled for years, including losses from the 2021 collapse of investment firm Archegos Capital.

The stock price plunge has reignited concerns for the global industry after Silicon Valley Bank and Signature Bank collapsed in the second and third largest US bank failures in history.

On Wall Street, bank stocks plummeted Monday, rebounded Tuesday, and plunged again Wednesday.

First Republic Bank fell 21.4%, a day after rising 27%. JPMorgan Chase slipped 4.7%.

Banks are struggling after the Federal Reserve’s fastest string of rate hikes in decades caused asset prices on their balance sheets to fall.

In his annual letter to investors, BlackRock CEO Larry Fink pointed to earlier periods of rising interest rates leading to “spectacular financial flare-ups,” like the savings and credit crunch of the 1980s.

“We do not yet know if the fallout from easy money and regulatory changes will spill over into the US regional banking sector (similar to the S&L crisis) and more seizures and closures are imminent,” he wrote.

Stress in the financial system could prompt the Fed to wait or at least refrain from raising rates at next week’s meeting may have signaled. But inflation of 6% in February is still well above the Fed’s target of 2%.

Weaker than expected economic reports released on Wednesday may have allayed some of those concerns.

One showed that Wholesale level inflation slowed significantly more than economists had expected in the past month. It’s still high at 4.6% year-over-year, but that was better than the 5.4% forecast.

Other data showed that US retail spending have fallen more than expected over the past month. Such data could raise concerns about an impending recession, but it could also take some pressure off inflation in the near term.

The yield on the two-year government bond, or the difference between its market price and the payout at maturity, eased to 3.89% with an unusually wide range from 4.25% on Tuesday as prices rose.

In energy markets, U.S. crude, the benchmark in electronic trading on the New York Mercantile Exchange, gained 84 cents to $68.45 a barrel. The contract fell $3.72 to $67.61 on Wednesday. Brent crude, the price basis for international oil trading, rose 96 cents to $74.65 a barrel in London. It lost $3.76 to $73.69 in the previous session.

The dollar fell to 132.95 yen from 133.46 yen on Wednesday. The euro rose to $1.0610 from $1.0586.