Asia’s stock markets were pulled in different directions at the start of the week with competing factors both boosting and dampening the mood across the region.
Investors were fretting over the potential fallout of Silicon Valley Bank’s (SVB) collapse last week though sentiment improved after US Federal Reserve announced a range of measures to support the banking system at the weekend.
Then there was more evidence of a recovery for the Chinese economy though that was tainted by the continuing gloomy picture elsewhere with more central bank tightening on the horizon.
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Japan’s Nikkei share average extended its losses, as its automakers slumped amid pressure from a stronger yen, with Nissan and alliance partner Mitsubishi Motors pacing declines.
The Nikkei share average slipped 1.11%, or 311.01 points, to close at 27,832.96, while the broader Topix was down 1.51%, or 30.59 points, to 2,000.99.
The drop followed mayhem on Wall Street on Friday, as banking shares slumped after SVB became the biggest bank failure since the financial crisis.
And banking was the worst performing sector among the Nikkei’s 33 industry groups, dropping 4.75% prompting Japan’s top government spokesman to try to allay fears over the SVB fallout, saying he didn’t see it affecting Japan’s lenders.
But China and Hong Kong stocks were boosted, not only by the US Fed’s rescue package but also by fresh signs of China’s recovery and after Beijing surprised traders by keeping the head of the central bank and finance minister in their posts at the annual session of parliament on Sunday.
“The move cut off the spread of pessimism among depositors in the short term, gave the market confidence and prevented bank runs,” said Pang Xichun, research director at Nanjing RiskHunt Investment Management Co.
The Shanghai Composite Index rose 1.20%, or 38.62 points, to 3,268.70, while the Shenzhen Composite Index on China’s second exchange edged up 0.44%, or 9.25 points, to 2,096.42.
Tech giants listed in Hong Kong jumped 4.4%, and China’s computer shares advanced 3.5% after new Chinese Premier Li Qiang sought to reassure the country’s private sector and President Xi Jinping said China must achieve greater self-reliance and strength in science and technology.
The Hang Seng Index jumped 1.95%, or 376.05 points, to 19,695.97.
Chinese-based firms which say they have minimal exposure to SVB mostly edged up, with Broncus Holding Corporation advancing 2.8% while drug developer Beigene Ltd slipped 0.5%.
Further supporting sentiment, China reported unexpectedly strong credit growth for February, with money supply expanding at the fastest pace in nearly seven years, as Beijing looks to support a nascent economic recovery amid rising global risks.
Elsewhere across the region, Sydney, Singapore, Mumbai, Taipei, Wellington, Manila and Jakarta were all in the red.
US stock futures and tech shares rose in Asia trade on the back of the Fed’s SVB news.
US banks lost over $100 billion in stock market value late last week following the collapse, while European banks lost around another $50 billion in value, according to a Reuters calculation.
“The Fed are not only addressing concerns over the bank’s asset side of the balance sheet but on the liability side, where they are essentially stepping in front of a larger bank run, which… can be devastatingly swift to bring down any institution,” said Chris Weston, head of research at Pepperstone.
SVB’s collapse comes alongside the closure of crypto-focused bank Silvergate, which last week disclosed plans to wind down operations and voluntarily liquidate, in the aftermath of FTX’s implosion last year.
US state regulators on Sunday also closed New York-based Signature Bank, which became the next casualty of the banking turmoil after SVB.
Tokyo – Nikkei 225 < DOWN 1.11% at 27,832.96 (close)
Hong Kong – Hang Seng Index > UP 1.95% at 19,695.97 (close)
Shanghai – Composite > UP 1.20% at 3,268.70 (close)
London – FTSE 100 < DOWN 2.50% at 7,555.01 (0934 GMT)
New York – Dow < DOWN 1.07% at 31,909.64 (Friday close)
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