Asian markets rally as bank worries fall

Asian markets bounced Wednesday as concerns about contagion from the collapse of two US regional lenders eased while investors turned their attention back to next week’s Federal Reserve interest rate decision.

Banks rallied in early exchanges after taking a battering the previous two days in reaction to the demise of Silicon Valley Bank and Signature Bank at the weekend, which were the biggest casualties since the global financial crisis.

But investor worries were soothed by the swift response from US authorities to pledge all depositors would get their cash and that other lenders would be given support. The run on deposits at SVB and Signature -- as well as crypto bank Silvergate Capital, which went under earlier in March -- led ratings agency Moody’s to cut its outlook for the US banking system to negative from stable.

Still, the mood on trading floors was less fraught than at the start of the week, with banks enjoying a much-needed lift.

Japan’s Sumitomo Mistui Financial gained more than three per cent and Mitsubishi UFJ Financial put on almost five per cent, while South Korea’s Hana Financial Group was up more than two per cent. HSBC gained more than three per cent.

On broader markets, Asia tracked a surge on Wall Street that was led by banks, though they pared morning rallies.

Hong Kong, Singapore, Seoul, Taipei and Manila all put on more than one per cent, while Bangkok was more than two per cent higher.

Shanghai, Sydney, Mumbai and Wellington were also up, while Tokyo and Jakarta were flat. However, European markets were unable to build on Tuesday’s big gains, with London, Paris and Frankfurt falling at the open.

Traders offered little reaction to data showing Chinese retail sales rebounded in January-February thanks to the lifting of zero-Covid restrictions and as the country celebrated Lunar New Year.