Wall Street soars as First Republic Bank receives $45 billion lifeline; Credit Suisse jumps

The ASX 200 lost its initial momentum as the stock market declined slightly, down 6 points to 6959.6 at midday with seven sectors lower, despite a rally on Wall Street on news that major players in the financial sector stepped in to buy it after a week to stabilize turmoil.

The energy sector was the strongest performer, with Woodside and Santos both up more than 1 percent. The real estate sector was the biggest drag, with mall operator Scentre down 1.7 percent, real estate developer Mirvac down more than 2 percent and GPT down more than 3 percent. This follows a 1.5 percent drop on Thursday, when the Credit Suisse crisis sent local stocks broadly lower.

The S&P 500 rose 1.8 percent for its best day in nearly two months after 11 of the largest banks announced they would deposit a total of $30 billion ($45 billion) in First Republic Bank. The Dow Jones Industrial Average recouped an early 300-point loss to rise 371 points, or 1.2 percent, while the Nasdaq Composite gained 2.5 percent.

This week was a whirlwind for markets around the world as they feared banks could buckle under the weight of the fastest rate hikes in decades. Concerns have flared since the Silicon Valley bank collapse on Friday, the second-largest bank collapse in U.S. history.

Since then, Wall Street has attempted to root out banks with similar characteristics, such as many depositors over the $250,000 limit managed by the Federal Deposit Insurance Corp. insured, or many tech startups and other highly connected people who do, can quickly raise concerns about a bank’s strength.

First Republic Bank was the focus of market action, rising 10 percent on Thursday after falling as much as 36 percent earlier in the day. In the statement announcing their deposits, the group of 11 banks said the move “reflects their confidence in the First Republic and in banks of all sizes.”

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In addition to stocks, Treasury yields also surged after the first reports of a possible industry bailout. That was a sign of increased confidence in the bond market.

On the other side of the Atlantic, European stocks rose after the European Central Bank announced a sharp hike in interest rates. Concerns about another bank, Credit Suisse, also eased, helping markets plummet on Wednesday. The Swiss bank has struggled for years, but its plunge to record lows raised concern as the broader industry drew more attention.