Asia report: Most markets rise as banking fears recede

Most Asia-Pacific stock markets were in the green on Tuesday, with investor concerns over the global banking sector easing.

The optimism came on the back of First Citizens Bank agreeing to purchase some of the collapsed Silicon Valley Bank, leading European and US stocks to finish positively overnight.

“Following a mildly positive finish on Wall Street, Asian equities have also posted modest gains overnight as risk sentiment remains buoyed by a belief that the banking stress of the past few weeks is starting to recede,” said TickMill market analyst Patrick Munnelly.

“The Fed added further support to First Republic Bank, as First Citizens Bank stepped in agreeing to acquire Silicon Valley Bank assets and deposits, both of which have seen a stemming in the stress in regional banking franchises in the US.”

However, Munnelly said it was likely too early to call the “all-clear”, as some investors remained on the sidelines waiting for the “inevitable” next shoe to drop.

“The overall improvement in the risk tone seen since the weekend has also weighed on interest rate expectations, with some market participants actively betting on rate cuts to begin later this year.

“Renowned bond investor Jeffery Gundlach, head of Doubleline Capital, believes the Fed will have to wind back rates as we head into the back end of the year.

“Markets are currently pricing rates to close out the year around 4.25%, down from prior [expectations of] 4.75% to 5%.”

Most markets in the green as banking concerns ebb

In Japan, the Nikkei 225 rose 0.15% to 27,518.25, while the Topix increased 0.25% to 1,966.67.

Notable gainers on the Nikkei included Renona Holdings, which rose 4.08%, Otsuka Holdings, which increased 3.04%, and Pacific Metals, which gained 2.83%.

In mainland China, the Shanghai Composite fell 0.19% to 3,245.38, while the Shenzhen Component decreased 0.72% to 11,564.45.

Among the losers in Shanghai were BaoJi Titanium, which declined 7.59%, and ArcSoft Corporation, which dropped 7.16%.

The Hang Seng Index in Hong Kong rose 1.11% to 19,784.65, with Tencent Holdings gaining 4.24%, ENN Energy increasing 3.34%, and China Petroleum & Chemical Corporation rising 3.09%.

In South Korea, the Kospi increased 1.07% to 2,434.94, with notable gainers including LG Display, which rose 8.9%, and Daewoo Shipbuilding, which added 6.87%.

The S&P/ASX 200 in Australia advanced 1.04% to 7,034.10, with Liontown Resources rocketing 68.53%, and Core Lithium increasing 15.39%.

Finally, the S&P/NZX 50 in New Zealand rose 1.36% to 11,771.27, with Mainfreight gaining 4.56% and Mercury NZ increasing 4.01%.

In currency markets, the yen was last 0.48% stronger on the dollar to trade at JPY 130.94, while the Aussie advanced 0.35% to AUD 1.4983, and the Kiwi was ahead 0.52% on the greenback at NZD 1.6054.

On the commodities front, Brent crude futures were last up 0.45% on ICE at $78.47 per barrel, while the NYMEX quote for West Texas Intermediate rose 0.44% to $73.13.

Hong Kong trade deficit near-doubles, retail sales growth slows down under

In economic news, Hong Kong’s trade deficit nearly doubled to HKD 45.37bn (£4.69bn) in February, up from HKD 25.37bn in January, according to data from the city’s census and statistics office.

February imports fell 4.1% year-on-year to HKD 331.57bn, while exports dropped 8.8% year-on-year to HKD 286.2bn.

The special administrative region’s total trade value in February was HKD 617.77bn, down slightly from HKD 659.69bn in February 2022.

In Australia, retail sales managed gains of 0.2% month-on-month, compared to January’s 1.9%, to reach AUD 35.14bn (£19.04bn), according to Canberra’s statistics bureau.

Year-on-year, retail sales were up 6.4% compared to February last year.

The ‘other retailing’ category, which includes newsagents and booksellers, recreational goods, pharmacy and other retailing, was the biggest drag on the figures, falling 0.4%, while department stores were the strongest sector, rising 1%.

Australia’s banking system was meanwhile described as “among the best equipped in the world to handle a crisis” by chairman of the country’s Prudential Regulation Authority, John Lonsdale.

Speaking at a banking summit, he noted that Australian banks had higher capital requirements and a narrower range of definitions of high-quality liquid assets than their global peers.

According to CNBC, Londsale claimed Australia was the only jurisdiction that mandated banks carry capital to address the risk of rising interest rates as part of their core capital requirements.

However, Lonsdale warned that regulators might need to strengthen the regulatory framework following the collapse of Silicon Valley Bank and its exposure to rising interest rates.

Finally, Japanese trade regulators struck a deal with their US counterparts on electric vehicle battery minerals, that would give Japan’s carmakers access to the Biden administration’s $7,500 EV tax credit scheme as part of the Inflation Reduction Act.

The Act mandates plug-in electric vehicles needed to be produced in North America to qualify for tax incentives.

US trade representative Katherine Tai said in a statement that the deal was “proof” of the US government’s “commitment to building resilient and secure supply chains.”

Reporting by Josh White for Sharecast.com.