Asian shares were mixed on Monday after stocks on Wall Street shook off a weak start to end higher on Wall Street last week despite worries over banks on both sides of the Atlantic Ocean.
On a lull in the news of troubles over the weekend, the benchmarks fell in Hong Kong, Shanghai, Seoul and Taiwan, but rose in Tokyo and Sydney. U.S. futures gained and oil prices were little changed.
Concerns that higher interest rates are squeezing lenders have revived fears of a recession and raised uncertainty about policies of the Federal Reserve and other central banks. Tim Waterer, an analyst at Kohle Capital Markets, said that financial stocks are pressured with traders on the lookout for any other potential pockets of trouble in the global financial system. After recent market gains, it is fair to say that traders are putting on a brave face despite no assurances that we have seen the last of the banking sector woes.
The International Monetary Fund's managing director, Kristalina Georgieva, told a conference in Beijing on Sunday that risks to financial stability have risen as interest rates are raised to fight inflation. She said the actions by central banks and other regulators have helped to ease the strains on markets but uncertainty is high, which underscores the need for vigilance. Chinese markets fell nearly 23% in the first two months of the year from a year earlier, as the government reported that industrial profits fell nearly 23% from a year ago.
Hong Kong's Hang Seng gave up 0.5% to 19,815. 03 and the Shanghai Composite Index lost 1.1% to 3,231. Tokyo's Nikkei 225 added 0.4% to 27,501. In Seoul, 60 and the Kospi fell 0.3% to 2,408. Australia's S&P ASX 200 edged 0.2% higher, to 6,969. The Sensex and the 20 in Mumbai gained 0.4%. In Bangkok, the shares were higher.
The S&P 500 rose 0.6%, marking its second straight week-on-week gain, to close at 3,970 on Friday. The Dow Jones Industrial Average was down 0.4% to 32,237. 53 and the Nasdaq composite climbed 0.3% to 11,823. The Russell 2000 index rose 0.9% to 1,734. After the recent spate of turmoil in the banking sector, investors are focused on what the Federal Reserve and other central banks will do with interest rates going forward.
Deutsche Bank's stock fell by 8.5% in Germany on Friday and the shares of other major European banks suffered smaller declines. Shares of Swiss bank Credit Suisse, which has its own unique set of troubles, fell so much that regulators brokered a takeover of it by rival UBS earlier this month.
The second and third largest U.S. bank failures in history earlier this month, of Silicon Valley Bank and Signature Bank, have put a harsher spotlight on the entire banking industry. Investors have zeroed in on smaller and mid-sized banks, the ones below in size of the too-big to-fail banks, and seen as greater risks.
Pressure on lenders could hinder lending to small and midsized businesses across the country. It could lead to less hiring, a weaker economy and a higher potential for a recession, which many economists already saw as likely.
Friday's reports on the economy came in mixed, with orders for long-lasting manufactured goods slower than economists expected, while business activity showed the fastest uptick in almost a year, according to a preliminary report from S&P Global.
U.S. benchmark crude oil rose 2 cents to $69.28 per barrel in electronic trading on the New York Mercantile Exchange. It lost 70 cents to $69.26 on Friday.
Brent crude, the basis for international trading, lost 3 cents to $74.55 in London.
The U.S. dollar was up to 130.64 Japanese yen from 130.57 yen. The euro fell to $1.0771 from $1.0774.