SINGAPORE, March 16 (Reuters) – Asian stocks tumbled Thursday, with investors buying gold, bonds and the dollar, as fears of a banking crisis were reignited by fresh problems at Credit Suisse, leading markets ahead of a later session the European Central Bank made nervous during the day.
Japan’s Nikkei (.N225) fell 2% in early trade. Australian shares (.AXJO) also tumbled 2%, led by losses in bank stocks, while miners also fell sharply as the specter of global banking stress prompts traders to divest from all types of growth-sensitive assets.
Hang Seng futures fell 2%. Oil prices have fallen to a 15-month low. Gold hit a six-week high overnight.
In New York, the S&P 500 (.SPX) fell 0.7%, but the focus was on banks and in Europe, where shares in Credit Suisse (CSGN.S) plunged 30% to a record low after its largest shareholder , the Saudi National Bank, had announced that it would not provide any further financial assistance.
The Swiss central bank has pledged to fund Credit Suisse “if necessary,” lifting Wall Street indices off their lows in afternoon trade, but the intervention isn’t exactly calming market fears. At 2%, the Swiss franc fell more than it had in seven years.
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In a joint statement, Switzerland’s financial regulator and the country’s central bank said that Credit Suisse “meets the capital and liquidity requirements imposed on systemically important banks.”
They said the bank could access liquidity from the central bank if needed. The moves follow the collapse of US lenders Silicon Valley Bank (SIVB.O) and Signature Bank (SBNY.O) in recent days, which have sent financial markets on a rollercoaster ride.
The Bank of England was holding emergency talks with international counterparts, the Telegraph newspaper reported on Wednesday. The Bank of England declined to comment.
Expectations for a 50 basis point rate hike in Europe have evaporated as markets reassess the global interest rate outlook amid banks’ nervousness.
Money market prices imply a less than 20% chance of a 50 basis point hike by the ECB, down from 90% the day before.
Shares in major U.S. banks, including JPMorgan Chase (JPM.N), Citigroup (CN) and Bank of America (BAC.N), fell overnight, sending the S&P 500 (.SPXBK) banking index down 3.62% pressed.
Bonds rallied strongly, taking US 2-year Treasury yields to their lowest level since September at 3.72% overnight. Benchmark 10-year yields fell 14 basis points to 3.494%.
The euro also fell sharply overnight as the US dollar rose, falling 1.4% to $1.0578. The flight to safety supported the yen, rising 0.6% to 132.59 per dollar in Asian trading on Thursday.
Edited by Shri Navaratnam
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