US banking crisis dogs markets

LONDON - Stock markets sank further in Asia and faltered in Europe on Tuesday, with banks sliding again on contagion fear after the collapse of two regional US lenders.

The dollar firmed before key US inflation data, having tumbled Monday on concern the Federal Reserve could be forced to cut rates to halt markets turmoil.

The sudden failure of Silicon Valley Bank (SVB) on Friday, followed by Signature Bank two days later, sparked heavy market losses worldwide on fears of a domino effect that could heighten recession risks.

Asian equities tanked Tuesday after Wall Street suffered another punishing selloff, particularly for midsized banks First Republic, KeyCorp and Zions Bancorp.

Oil prices tumbled further with traders concerned about the demand outlook caused by a possible recession.

Europe's markets flickered between losses and gains as the morning progressed, with gloomy news from banking giant Credit Suisse grabbing traders' attention.

SOME SENSE OF CALM

"There was a sense some calm had been restored to markets after a bruising few sessions," said AJ Bell investment director Russ Mould.

"While the immediate fallout from the SVB collapse may have been contained for now, the edginess around the banking sector is not helped by the latest revelations from Credit Suisse as it identified material weaknesses in reporting controls."

Shares in the scandal-hit Swiss bank dived another five percent in Zurich, having struck a record low the previous day.

Credit Suisse acknowledged Tuesday that it had uncovered "material weaknesses" in its internal controls over financial reporting for 2021 and 2022.

The lender revealed the news in its annual report, which was delayed following queries from US regulators regarding its books.

"Credit Suisse is always in the emergency room when it comes to any market crisis, and today's news really intensifies the worries," noted IG analyst Chris Beauchamp.

"It's a bank that can never seem to get its house in order."

REVERBERATIONS

The rest of Europe's banking sector continued to languish in the red.

Shares in French lender Credit Agricole dived 1.2 percent and rival Societe Generale lost 1.1 percent.

Germany's Commerzbank dropped 0.4 percent and Deutsche Bank shed 0.6 percent. 

In London, HSBC fell 1.3 percent one day after it bought SVB's UK division for a nominal £1 ($1.2).

"Bank shares globally continued to feel the reverberations from the fallout from the Silicon Valley Bank issue, with general sentiment weakening as a result," said Richard Hunter, head of markets at Interactive Investor.

The fast-moving crisis has forced US authorities to immediately pledge support for other lenders and depositors.

Bloomberg News reported that about $465 billion had been wiped off the market value of global financial stocks in just three days.

The collapse of SVB, which specialised in venture-capital financing mainly in the tech sector, was largely the result of the Fed's sharp interest rate hikes aimed at quelling inflation, which hit securities hard.

Key figures around 1015 GMT 

London - FTSE 100: DOWN 0.3 percent at 7,522.66 points

Frankfurt - DAX: UP 0.5 percent at 15,027.77

Paris - CAC 40: UP 0.1 percent at 7,015.07

Zurich - SMI: DOWN 0.2 percent at 10,613.29 

EURO STOXX 50: UP 0.2 percent at 4,104.90

Tokyo - Nikkei 225: DOWN 2.2 percent at 27,222.04 (close)

Hong Kong - Hang Seng Index: DOWN 2.3 percent at 19,247.96 (close)

Shanghai - Composite: DOWN 0.7 percent at 3,245.31 (close)

New York - Dow: DOWN 0.3 percent at 31,819.14 (close)

Dollar/yen: UP at 134.15 yen from 133.22 yen on Monday

Euro/dollar: DOWN at $1.0712 from $1.0731

Pound/dollar: DOWN at $1.2156 from $1.2181

Euro/pound: UP at 88.12 pence from 88.08 pence

West Texas Intermediate: DOWN 2.6 percent at $72.86 per barrel

Brent North Sea crude: DOWN 2.3 percent at $78.88 per barrel

Agence France-Presse

Markets drop as traders nervously await US jobs data

HONG KONG - Asian stocks mostly fell Thursday ahead of key US jobs data at the end of the week, after Federal Reserve boss Jerome Powell warned it could ramp up its pace of interest rate hikes if the economy shows no sign of slowing.

Markets have been falling since the start of February as a string of forecast-beating indicators have shattered hopes the US central bank could pause its tightening campaign soon, and even cut borrowing costs by the year's end.

And on Tuesday, Powell delivered another blow by telling lawmakers that with inflation still stubbornly high and the jobs market tight, officials were prepared to hike by half a percentage point at their next meeting as they struggle to control prices.

That would be twice the last increase, which followed a period of bumper increases last year.

The prospect of rates going ever higher -- with some predicting six percent from the current 4.5-4.75 percent -- has ramped up fears the world's top economy could tip into recession. Analysts pointed out that bond markets suggest a contraction is on the cards.

He reiterated monetary policymakers' determination to quell inflation on Wednesday in a second day of testimony to US lawmakers, though he did say the decision would be driven by data, with a close eye on the labour market.

"If -- and I stress that no decision has been made on this -- but if the totality of the data were to indicate that faster tightening is warranted, we'd be prepared to increase the pace of rate hikes," he said.

"Inflation is coming down but it's very high," he added. "Some part of the high inflation that we are experiencing is very likely related to a very tight labour market."

Meanwhile, the Fed's "beige book" survey of economic conditions said "inflationary pressures remained widespread" and that "labour market conditions remained solid".

RECESSION FEARS HIT OIL

Powell's comments "helped briefly pull yields lower and pull the US dollar off its highs for the day, but the reality remains that markets are slowly starting to come to the realisation that rates are likely to remain higher for longer and that the terminal rate is also likely to settle at a much higher level", said CMC Markets' Michael Hewson.

Traders are now awaiting Friday's non-farm payrolls figures for February, with a strong reading likely to put pressure on the Fed to hike by 50 basis points. 

In a worrying sign for risk appetite, a report on the private sector showed a bigger-than-expected jump in jobs last month -- double January's number -- while wage growth remained solid.

After a tepid day on Wall Street, Asian markets mostly edged down.

Hong Kong was flat while Shanghai fell with Singapore, Seoul, Wellington, Taipei, Mumbai and Manila. London, Paris and Frankfurt followed suit at the open.

Tokyo, Sydney, Bangkok and Jakarta rose.

Growing concerns about rising rates causing a possible recession were keeping pressure on oil prices, which extended Wednesday's losses.

"Crude prices can't shake off fears that the Fed is going to send the US economy into a bad recession," said OANDA's Edward Moya, adding that data showing a small dip in US stockpiles was unable to shake off the unease.

"The amount of crude demand uncertainty over the short-term is keeping oil prices heavy. WTI crude looks like it will be stuck between the mid-$70s and the low $80s until we have a better idea on what type of recession the Fed will trigger."

Key figures around 0820 GMT

Tokyo - Nikkei 225: UP 0.6 percent at 28,623.15 (close)

Hong Kong - Hang Seng Index: DOWN 0.6 percent at 19,925.74 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,276.09 (close)

London - FTSE 100: DOWN 0.3 percent at 7,909.47

Euro/dollar: UP at $1.0554 from $1.0547 on Wednesday

Pound/dollar: UP at $1.1847 from $1.1845

Euro/pound: UP at 89.09 pence from 89.01 pence

Dollar/yen: DOWN at 136.83 yen from 137.43 yen 

West Texas Intermediate: DOWN 0.2 percent at $76.51 per barrel

Brent North Sea crude: DOWN 0.2 percent at $82.51 per barrel

New York - Dow: DOWN 0.2 percent at 32,798.40 (close)

Agence France-Presse

Omicron panic pummels equities, oil

NEW YORK - Global equity and oil markets slumped Monday on investor panic over the impact of worldwide measures to contain the fast-spreading Omicron coronavirus variant, dealers said.

Asia tanked due to concerns over a fresh global surge in coronavirus infections, sparking a fierce renewed selloff in Europe, while Wall Street indices also closed lower.

Oil tumbled as traders fretted over how the latest Covid-19 strain might hit the world's appetite for energy, which has already suffered a heavy blow since the pandemic erupted early last year.

In New York, sentiment was jarred by a crucial moderate Democratic senator's announcement that he would not support President Joe Biden's social spending bill, imperiling the measure that some analysts view as a positive for US growth.

"It does not feel like the most wonderful time of the year for Wall Street," Oanda's Edward Moya said in a note.

OMICRON PANIC MODE

The British pound fell sharply after the surprise weekend departure of Prime Minister Boris Johnson's Brexit minister David Frost.

"After battling endless headwinds in recent weeks, markets have finally been knocked over as the rapid spread of Omicron finally reaches panic mode," said AJ Bell investment director Russ Mould.

Meanwhile, the EU's drug regulator approved a fifth Covid jab as the United States warned of a bleak winter with the Omicron variant spurring new waves of infections globally.

Since it was first reported in South Africa in November, Omicron has been identified in dozens of countries, prompting many to reimpose travel restrictions and other measures.

The Netherlands imposed a Christmas lockdown, and Germany tightened restrictions notably affecting the unvaccinated, while media speculation swirls over the re-imposition of tougher UK curbs.

STOLEN CHRISTMAS?

The rapid spread of Omicron has also slammed the oil market and travel stocks, since a return to containment measures and travel curbs would hit the aviation and tourism industries as well as dampen demand for fuel.

"There is some de-risking in the face of headline news that has market participants thinking the Omicron Grinch might steal Christmas after all," said analyst Patrick J. O'Hare at Briefing.com.

With traders beginning to wind down ahead of the festive season, analysts said trade was thinner and markets more susceptible to swings, but the mood has become increasingly glum as central banks start paring their huge financial support to fight inflation.

World markets had briefly risen last week after other major central banks took action to combat soaring inflation, even as spiking Covid-19 cases threaten the fragile economic recovery.

The Bank of England delivered the first interest rate hike in three years, while the Federal Reserve said it would speed up the taper of its bond-buying program and indicated three interest rate hikes before the end of 2022.

Dealers were unmoved Monday by news that China had trimmed a key interest rate by five basis points as it looks to reignite the stuttering economy.

Meanwhile, in Chile, the Santiago stock market plunged almost seven percent at the opening bell after leftist Gabriel Boric decisively won the presidential election, with the Chilean peso also taking a beating.

Agence France-Presse

Dollar edges higher, currencies pull back on Omicron-shock moves

LONDON - The dollar edged higher, the euro fell and the yen steadied on Monday as currency markets reversed some of Friday's moves, calming after the initial shock of discovering a new coronavirus variant.

The Omicron variant, first detected in southern Africa, triggered global alarm, with financial markets selling off on Friday on fears that it would disrupt the economic recovery after the two-year pandemic.

The World Health Organization said it was not yet clear whether Omicron, which has been found around the world, is more transmissable than other variants or if it causes more severe disease.

Markets calmed somewhat on Monday, however, with US stock futures and oil prices rebounding, as investors took a more balanced view, waiting until the impact of the variant becomes more clear.

The US dollar index, which had its biggest one-day drop since May on Friday, edged back higher and at 0821 GMT was up 0.1 percent on the day at 96.326.

The dollar's status as a safe-haven currency means it can benefit from uncertainty, but it fell on Friday because the Omicron variant was seen as possibly affecting when the Federal Reserve and other major central banks will raise rates.

The euro, which rose versus the dollar on Friday, was down around 0.4 percent at $1.12665.

Commerzbank's head of FX and commodity research Ulrich Leuchtmann wrote in a client note that the euro had initially benefited from the Omicron variant because of the dovishness of the European Central Bank.

"If Omicron leads to lockdowns and a renewed reduction in economic activity on a global scale all rate hike expectations turn out to be in vain and then they will be priced out again pretty quickly," he said.

"And which currencies will be the relative winners? Of course, the ones where rate hikes were never priced in very much in the first place. And those were EUR, JPY and CHF."

Japan's yen steadied and was up around 0.2 percent on the day versus the dollar at 113.33 at 0829 GMT. Euro-yen hit a new nine-month low.

The Swiss franc likewise reversed recent moves. On Friday it had its biggest one-day jump versus the dollar since June 2016, a slightly bigger daily move than at the peak of the first coronavirus-induced market shock in March 2020, but on Monday it was down 0.4 percent on the day, at 0.9256.

Analysts said that currency markets would likely remain volatile until the new variant is better understood.

"Vaccine efficacy results with the next two weeks will be the most important headline to watch out for as well as whether symptoms are different from that of other variants," wrote Nomura analyst Jordan Rochester in a note to clients.

Goldman Sachs said it would not change its economic forecasts on the basis of the Omicron variant until its likely impact becomes clearer.

BioNTech said on Friday it may know within two weeks if the vaccine it developed with Pfizer needs to be reworked.

Meanwhile, in cryptocurrencies, bitcoin hit a seven-week low on Sunday before picking up. At 0837 GMT, it was at $57,386.24, up around 0.1 percent on the day but still below its latest all-time high of $69,000, which was hit earlier this month.

(Reporting by Elizabeth Howcroft, editing by Ed Osmond)

-reuters

Asian markets mostly up as vaccine, data add to recovery hopes

HONG KONG – Asian markets mostly edged up Wednesday but gains were tempered as investors took a breather following a recent run-up, though another round of healthy data provided cause for continued optimism for the global recovery.

President Joe Biden gave cause to cheer by saying all adults in the United States would be eligible for a vaccine by April 19, almost two weeks earlier than previously pledged, reinforcing hope that the world’s top economy will get back on its feet more quickly.

That came as California’s governor said he aims to fully reopen the most populous US state by the middle of June if the current pace of inoculations continues.

In a further sign the United States was bouncing back, officials said job openings had surged to a two-year high in February, well above the level expected by most analysts.

That followed last week’s forecast-busting employment report and data showing a strong pick-up in the manufacturing and key services sector.

The string of healthy data — along with Biden’s $1.9 trillion stimulus and $2.25 trillion infrastructure proposal — have helped world markets climb to record or multi-month highs.

Recent concerns that the recovery and expected spending splurge will fan inflation and force central banks to lift interest rates have eased for now, with benchmark 10-year US Treasury yields dipping.

The International Monetary Fund backed up the view of a strong rebound by hiking its 2021 growth forecast for the second time in three months, predicting a 6.0 percent expansion, from its 5.5 percent prior estimate.

Toshiba set to surge

“Early signs show the recovery is accelerating, suggesting a faster return to ‘normal’ than many had dared to hope a few months ago,” said JP Morgan Asset Management’s David Kelly.

“While this is very good news in general, it brings with it challenges for investors in making sure their portfolios are positioned for the very different financial landscape of a post-pandemic world.”

Wall Street was unable to maintain the momentum Tuesday, however, and all three main indexes retreated slightly.

But observers were confident the gains will continue.

“Central banks are continuing to keep interest rates so low so people are looking for some place to put their money where they can get a return,” Sarah Hunt of Alpine Woods Capital Investors told Bloomberg TV.

“I think that’s also why you have stocks priced somewhat for perfection.”

In early trade, Hong Kong dipped as it reopened after an extended holiday weekend, while Shanghai and Tokyo also dropped.

Analysts said buying was dampened by the Chinese central bank’s move to slow loan growth owing to concerns about the development of bubbles.

Elsewhere in Asia, Sydney, Singapore, Seoul, Taipei, Manila, Jakarta and Wellington were in positive territory.

Shares in Japanese giant Toshiba were set to soar Wednesday after it confirmed it had received a buyout offer from a British private equity firm that a report said could be worth $20 billion.

The Nikkei newspaper said CVC Capital Partners was considering a 30 percent premium over the industrial group’s current share price. A flood of buy offers that outweighed sell orders meant the stock could not be traded in early business.

Toshiba said it would “request detailed information and carefully discuss” the offer.

Key figures around 0245 GMT

Tokyo – Nikkei 225: FLAT at 29,685.77 (break)  

Hong Kong – Hang Seng Index: DOWN 0.5 percent at 28,790.62

Shanghai – Composite: DOWN 0.6 percent at 3,460.87

Euro/dollar: DOWN at $1.1869 from $1.1876 at 2100 GMT

Pound/dollar: DOWN at $1.3821 from $1.3823

Euro/pound: DOWN at 85.87 pence from 85.89 pence

Dollar/yen: UP at 109.80 yen from 109.73 yen

West Texas Intermediate: DOWN 0.2 percent at $59.24 per barrel

Brent North Sea crude: DOWN 0.1 percent at $62.65 per barrel

New York – Dow: DOWN 0.3 percent at 33,430.24 (close)

London – FTSE 100: UP 1.3 percent at 6,823.55 (close)

Agence France-Presse 

Global stocks slide on looming Brexit risk

NEW YORK, United States — World stock markets extended losses Monday as fears heightened that Britain could vote to leave the European Union in next week’s referendum.

Tokyo’s main stocks index dived 3.5 percent to a two-month low point by Monday’s close, as worries over Britain’s EU membership vote on June 23 sparked a rally in the safe-haven yen currency, which in turn hammered shares in Japanese exporters.

Craig Erlam, senior market analyst at Oanda trading group, said “risk aversion” continued to drive markets ahead of “a number of key risk events”.

“The UK referendum next week is right at the top of this list given the destabilization effects that a vote to leave the EU could have on global markets,” he said in a note to investors.

US stocks joined the global retreat, falling for a third straight day and pushing the S&P down 0.8 percent. But shares in professional networking company LinkedIn shot up 46.6 percent on news of its $26.2 billion takeover by Microsoft.

Shares of US travel-oriented equities were especially weak, with American Airlines, Delta Air Lines and United Continental all losing at least 3.5 percent in the aftermath of Sunday’s deadly attack by a lone gunman at a gay nightclub in Orlando, Florida.

London’s FTSE 100 index lost 1.2 percent. In the eurozone, Frankfurt’s DAX 30 index and the CAC 40 in Paris were both about 1.8 percent lower. Banking stocks weighed in Milan, where the main index slid 2.9 percent to its lowest level since February.

In foreign exchange, the British pound hit two-month lows against both the euro and dollar.

The pound’s latest tumble against the dollar “could be the tip of the iceberg” if Britons opt to quit the EU, said Alex Holmes, of Capital Economics.

The European single currency meanwhile sank as low as 119 yen, the lowest level since February 2013.

Central banks on tap

Markets also are on edge as the US, Japanese and British central banks meet this week.

Few expect any move on interest rates from the US Federal Reserve and Bank of England, but observers are divided over whether the Bank of Japan will announce more stimulus.

“Chances of the Fed raising interest rates this month are nil at this point, with a July raise looking less and less likely,” Mark Vickery, of Zacks Investment Research, said in a note to clients.

For Oanda’s Erlam, the Brexit risk is also playing a role in the Fed’s timing.

“The Fed will meet this week and while the (May) jobs report may have given them a reason to put off raising interest rates again, the closing of the gap ahead of the UK referendum is likely the real reason behind the delay,” he said.

Hong Kong’s main stocks index tumbled 2.5 percent and Shanghai dived 3.2 percent, while Seoul sank 1.9 percent and Singapore 1.6 percent.

source: business.inquirer.net

Asian stocks mostly lower as oil hits new lows

HONG KONG – Asian markets mostly slipped Tuesday, following a sell-off in Europe and the United States, as oil prices plunged to more than five-year lows and data indicated Chinese manufacturing activity shrank in December.

The dollar and euro edged lower against the yen after losing pace Monday owing to the uncertainty caused by the weak crude, which has increased pressure on Russia’s economy, spooking investors.

Tokyo tumbled 1.80 percent, Hong Kong lost 0.65 percent, Sydney slipped 0.39 percent and Seoul was 0.62 percent lower, while Shanghai rose 0.55 percent.

In China, banking giant HSBC said its preliminary index of manufacturing activity came in at 49.5 this month, compared with 50 in November. Anything below 50 points to contraction and anything above shows growth.

The figures are the latest in a long line that show the world’s number two economy is slowing. However, Shanghai shares advanced — extending a recent bull run — on hopes the government will introduce new measures to spur growth.

Oil-linked firms are being hammered after crude prices plunged by about half from their June highs, weighed down by an oversupply on world markets, falling demand and OPEC’s decision to maintain high output levels.

Despite the benefits cheap oil brings to some, global stock markets have been dragged down by energy giants and analysts warn there could be further falls on the way.

On Tuesday in Asia, US benchmark West Texas Intermediate for January delivery fell 38 cents to $55.53 while Brent crude for January eased 48 cents to $60.58 — both to levels last seen in mid-2009.

‘More pain in store’

US shares tumbled, with the Dow off 0.58 percent, the S&P 500 falling 0.63 percent and the Nasdaq slumping 1.04 percent.

Earlier Monday, London’s FTSE 100 ended down 1.87 percent, while equity markets in France and Germany fell more than 2.5 percent.

“Oil prices continue to slide, and that is now the chief worry to Russia, which is essentially an oil-exporting economy,” Yoshihiro Okumura, general manager at Chibagin Asset Management, told Dow Jones Newswires.

“The creeping fear is that Russia may default, reminding investors of the prior Greek fiscal panic, and require a bailout. Beyond that, a ‘domino effect’ of worsening fiscal conditions at other oil-exporting nations may take hold.

“Oil prices look far from settled at the mid-$50 level, so more pain may yet be in store.”

Moscow was forced to ramp up interest rates early Tuesday, to 17 percent from 10.5 percent, after the ruble plunged to a fresh record-low against the dollar.

The slide came as the Russian central bank said weak oil prices could lead to a contraction of nearly five percent next year and as tensions with the United States over the Ukraine crisis increased.

The uncertainty pushed the yen up as traders looked for safer investments. The dollar was buying 117.75 yen early Tuesday against 117.81 yen in New York

The euro was at 146.48 yen from 146.50 yen, and $1.2441 from $1.2435.

The yen is considered a safe haven in times of turmoil.

Gold was at $1,198.07 an ounce compared with $1,210.54 late Monday.

source: business.inquirer.net