Asian stocks staged a recovery on Friday as investors’ nerves calmed after a tumultuous week sparked by threats of a banking crisis in the US and Europe spreading worldwide.
Signs of an economic recovery in China also lifted the mood on trading floors and that saw tech and banking stocks claw back some of their losses from the previous four days.
Japan’s Nikkei share average ended higher, led by financial and electronics shares, as easing worries over the collapse of US private lender Silicon Valley Bank and struggles of Swiss bank Credit Suisse Group lifted sentiment.
The Nikkei share average was up 1.20%, or 323.18 points, to close at 27,333.79, while the broader Topix rose 1.15%, or 22.32 points, to 1,959.42.
The Nikkei, however, ended lower for the week, with the brewing banking crisis sending bond yields plunging, while market participants sharply lowered expectations of future interest rate hikes in Western economies.
Electronics giant Sony Group Corp and financial institution Mizuho Financial Group, up 3.52% and 1.96%, respectively, were among the top gainers on the Nikkei.
China stocks jumped, tracking the gains in global markets after US banks moved to rescue another regional lender, while investors also cheered signs of an economic recovery in the world’s No2 economy.
Foreign investors snapped up Chinese shares with the overseas net buying via the Stock Connect surpassing 12 billion yuan ($1.75 billion) and set to log the biggest daily inflow since end-January.
And China’s CSI 300 Real Estate Index climbed 1.9% amid signs the country’s property market is stabilising.
The Shanghai Composite Index advanced 0.73%, or 23.65 points, to 3,250.55, while the Shenzhen Composite Index on China’s second exchange edged up 0.52%, or 10.70 points, to 2,060.18.
Hong Kong-listed shares of search engine giant Baidu surged 15.7%, recouping losses suffered a day earlier after the launch of its artificial intelligence-powered Ernie bot.
Other tech and media stocks also rose. Information technology companies soared 3.5% and anime comic gaming firms surged 5%, while tech giants listed in Hong Kong added 4.4%.
The Hang Seng Index gained 1.64%, or 314.68 points, to end at 19,518.59.
Elsewhere across the region, Taipei, Manila and Jakarta all rose more than 1%, while Sydney, Seoul and Bangkok were also in the green.
First Republic Bank Deposits
The optimism was set to spill over to Europe, with pan-region Euro Stoxx 50 futures up 0.6%. S&P 500 futures rose 0.1% while Nasdaq futures gained 0.2%.
Overnight, the European Central Bank (ECB) delivered an inflation-fighting 50 basis point rate hike in line with oft-repeated guidance, with sentiment buttressed by the Swiss National Bank’s massive support for Credit Suisse Group, which sent the troubled lender’s shares 20% higher.
Further helping sentiment, as many as 11 US banks including JPMorgan Chase & Co will deposit as much as $30 billion into First Republic Bank.
In an indicator that not all worries have gone away, the bank’s shares, which had closed 10% higher after a volatile day that saw trading halted 17 times, slumped by 17% in after-market trading.
Also, data showed overnight that banks sought record amounts of emergency liquidity from the Federal Reserve over recent days, underscoring the scale of stress in the financial system.
Ten-year yields were mostly steady at 3.5600% on Friday and were set for a weekly decline of 13 basis points.
The US dollar reversed some of its safe-harbour flows, with the dollar index last down 0.3% to 104.4.
“The past week has provided an unwelcome reminder of the inherent fragility of banking systems,” said analysts at Capital Economics in a note to client.
“There is still a great deal of uncertainty. The key question is whether this episode proves another relatively brief period of volatility that soon dies down, or the first tremors of a major banking crisis. At this stage, the answer is unknowable.”
Tokyo – Nikkei 225 > UP 1.20% at 27,333.79 (close)
Hong Kong – Hang Seng Index > UP 1.64% at 19,518.59 (close)
Shanghai – Composite > UP 0.73% at 3,250.55 (close)
London – FTSE 100 > UP 0.96% at 7,480.94 (0930 GMT)
New York – Dow > UP 1.17% at 32,246.55 (Thursday close)
- Reuters with additional editing by Sean O’Meara