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08 December 2023

Asian stocks higher after Wall St rebounds from bank jitters


Asian stock markets rebounded Wednesday after Wall Street stabilized following sharp declines for bank stocks and U.S. inflation eased but stayed high.
Shanghai, Tokyo, Hong Kong and Sydney advanced. Oil prices regained some of the previous day's sharp losses.
Wall Street's benchmark S&P 500 index rose Tuesday as bank stocks recovered some of their losses caused by worries customers might pull out deposits following the collapse of two U.S. lenders.
Stocks rose despite inflation data showing prices rose 6% over a year earlier in February, down from the previous month's 6.4% but still far above the Federal Reserve's 2% target. Investors had worried the Federal Reserve might respond to enduring upward pressure on prices by speeding up the pace of interest rate increases.
"The anchoring of less hawkish expectations provided some catalyst for risk sentiments to recover,” Yeap Jun Rong of IG said in a report. "There were also no new negative headlines of another bank or funds in trouble, which allows investors’ sentiments to settle down.”
Market jitters about more interest rate hikes to dampen economic activity and inflation were temporarily overshadowed by anxiety about the U.S. financial system following the collapse of Silicon Valley Bank on Friday and Signature Bank on Sunday. President Joe Biden and regulators tried to assure the public risks were contained and deposits in other banks were safe.
Tuesday's data showed core inflation, with volatile energy and food prices stripped out to show a clearer trend, was 0.5% in February over the previous month, edging up from January's 0.4% gain. The Fed pays close attention to core inflation in making monetary policy.
Signs of enduring upward pressure on prices usually add to expectations of more rate hikes, but the Fed faces a dilemma over how to respond to stress on the banking system. Many are under strain after the fastest pace of rate hikes in a decade knocked down the prices of their assets.
The Shanghai Composite Index rose 0.6% to 3,263.83 and the Nikkei 225 in Tokyo advanced 0.3% to 27,306.80. The Hang Seng in Hong Kong jumped 2.4% to 19,698.77.
The Kospi in Seoul surged 1.9% to 2,393.60 and Sydney's S&P-ASX 200 gained 0.4% to 7,033.70. New Zealand, Singapore and Jakarta advanced while Bangkok declined.
Traders rushed Monday to place bets that the Fed could keep rates steady at its next meeting, instead of accelerating to a hike of 0.50 percentage points, double last month's margin, according to data from CME Group.
On Wall Street, the S&P 500 rose 1.7% to 3,920.56, reversing from a three-day string of declines.
The Dow Jones Industrial Average rose 1.1% to 32,155.40. The Nasdaq added 2.1% to 11,428.15.
First Republic Bank jumped 27% after plunging 67.5% over the prior three days. KeyCorp gained 6.9%, Zions Bancorp. rose 4.5% and Charles Schwab climbed 9.2%.
The yield on a two-year Treasury, or the difference between the market price and the payout at maturity, climbed back to 4.21% from 4.02% late Monday, another huge move. The yield on the 10-year Treasury jumped to 3.66% from 3.55%.
In energy markets, benchmark U.S. crude rose 92 cents to $72.25 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $3.47 on Tuesday to $71.33. Brent crude, the price basis for international oil trading, advanced 89 cents to $78.34 per barrel in London. It lost $3.32 the previous day to $77.45.
The dollar declined to 134.09 yen from Tuesday's 134.19 yen. The euro rose to $1.0754 from $1.0741.