Asian markets rise as banking crisis risk looks contained

17 Mar 2023 , 08:46 AM

Asian markets continued the positive momentum from Wall Street’s  rally on Friday, marking the end of a volatile week. The week was characterized by a brewing banking crisis, which led to a significant drop in bond yields. 

Additionally, market participants drastically reduced their expectations of future interest rate hikes in Western economies.

The European Central Bank (ECB) implemented a rate hike of 50 basis points to combat inflation, as previously indicated. This move was well-received, and the Swiss National Bank’s significant support for Credit Suisse Group AG further boosted market sentiment. As a result, the struggling lender’s shares saw a surge of 20%.

Investor sentiment was further bolstered by the news that 11 U.S. banks, including JPMorgan Chase & Co, will deposit up to $30 billion into First Republic Bank. This move was well-received, and the distressed lender’s stock saw a 10% increase as a result.

On Friday, MSCI’s broadest index of Asia-Pacific shares, excluding Japan, saw a 0.9% increase, which reversed losses from earlier in the week. In Japan, the Nikkei also saw gains, climbing 0.5%.

China’s blue chips rose 0.8%, while Hong Kong’s Hang Seng Index rose 1.2%.

After major US stock indices rallied sharply on easing fears of a global banking crisis, S&P 500 futures fell 0.1% and Nasdaq futures were flat.

On Friday, ten-year bond yields remained stable at 3.5789%, with a weekly decline of 11 basis points expected.

Although oil prices fell on Friday, they were on track for a 10% decline for the week. U.S. crude decreased by 0.3% to $68.15 per barrel, and Brent crude also slipped by 0.3%, trading at $74.5 per barrel.

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