Asia report: Stocks fall after Wall Street's overnight sell-off

Share markets across the Asia-Pacific region were weaker on Friday, following a dire session on Wall Street overnight, as investors awaited the release of the US nonfarm payrolls report later in the day.

“Asian markets followed Wall Street's slump as the banking sector witnessed its biggest sell off since the pandemic crisis crash,” said Patrick Munnelly at TickMill Group.

“The selling in the banking sector was driven by a 60% slashing in the value of Silicon Valley Bank (SVB).

“Markets are sensing that SVB could be the next shoe to drop in the crypto carnage that started with FTX fraud leading to the Silvergate scandal that now appears to be enveloping the venture capital community.”

Munnelly noted that “prominent VC player” Peter Thiel had advised his funded companies to pull funds from SVB immediately, leading to another high profile figure in the space, Bill Ackman of Pershing Square, to comment that a failure of SVB could destroy the “lifeblood capital” of the VC community, leading to suggestions the government should consider a bailout for the beleaguered bank.

“The US banking sector saw over $50bn in value erased in yesterday’s US trading session as contagion concerns saw investors fleeing the sector, with JP Morgan losing over 5%.

“This banking sector aversion spread into the Asian trading session with Asian investors paring exposure to the sector in unison with their US counterparts.”

Bourses in the red across the region

In Japan, the benchmark Nikkei 225 declined by 1.67% to 28,143.97, while the Topix index was down by 1.91% to 2,031.58.

Shares of Resona Holdings, Chiba Bank, and Nippon Yusen were among the top losers on Tokyo’s main board, falling by 7.47%, 7.33%, and 6.58%, respectively.

In China, the Shanghai Composite index slipped by 1.4% to 3,230.08, while the Shenzhen Component was down by 1.19% to 11,442.54.

Great Wall Motor and HMT Xiamen New Technical Materials were the biggest losers in Shanghai, declining by a respective 10% and 7.62%.

Hong Kong's Hang Seng Index was down by 3.04% to 19,319.92, with JD.com, China Unicom Hong Kong, and BYD leading the losses, falling by 11.49%, 9.08%, and 8.13%.

In South Korea, the benchmark Kospi index fell by 1.01% to 2,394.59, with Hanmi Science and Hanmi Pharm leading the declines, down by 6.32% and 5.01%, respectively.

Australia's S&P/ASX 200 index declined by 2.28% to 7,144.70, with Insignia Financial and IGO leading the losses, falling by 7.62% and 7.24%.

In New Zealand, the S&P/NZX 50 index slipped by 0.84% to 11,727.04, with ANZ Holdings and Vital Healthcare among the top losers, down by 3.33% and 2.95%, respectively.

On the currency front, the Japanese yen weakened against the dollar, last trading down 0.46% at JPY 136.78, while the Aussie was near-flat, down 0.05% to AUD 1.5181.

The Kiwi was meanwhile stronger on the greenback, last trading up 0.15% at NZD 1.6369.

In energy markets, oil prices declined, with Brent crude futures last down 0.78% at $80.95 per barrel on ICE, and the NYMEX quote for West Texas Intermediate falling 0.95% to $75.00.

BoJ maintains policy at Kuroda’s final meeting

The Bank of Japan announced that it was standing pat on monetary policy, as largely expected by analysts.

The interest rate would remain negative at -0.1%, and the bank said it would continue to aim to maintain the yield on the 10-year Japanese government bond around 0%.

It said Japan's economy had been picking up despite being affected by high commodity prices.

It was BoJ governor Haruhiko Kuroda's final meeting in his term.

“We think incoming BoJ governor Ueda is a pragmatic technocrat, who will keep monetary policy settings easy, until he sees evidence of a self-sustained domestic demand-driven recovery,” said Duncan Wrigley at Pantheon Macroeconomics.

“Outgoing governor Kuroda recognises that December's tweak to the yield control curve policy has not removed bond market distortions.

“Even so, his successor Mr Ueda probably will avoid rocking the boat straight away and take some time to investigate alternative options for maintaining loose policy, given the lacklustre economy.”

Elsewhere, household spending in Japan fell by 0.3% in January compared to the same period the previous year, according to government data.

Economists had predicted a drop of 0.1% for the month, although it was a slowdown from December’s household spending print, which fell 1.3%.

Meanwhile, in South Korea, the current account balance returned to a deficit of $4.52bn in January, according to data from the Bank of Korea.

That followed a surplus of $2.68bn in December.

January's report marked the first time South Korea's current account balance had fallen into deficit territory since August last year.

Reporting by Josh White for Sharecast.com.