Asian stocks fall as Credit Suisse amplifies bank fears

Stocks fell Thursday morning after the US and Europe fell as turmoil at Credit Suisse sparked renewed selling in the banking sector.

Japan’s Topix lost 1.3 percent, South Korea’s Kospi 0.1 percent and Australia’s S&P/ASX 200 1.5 percent. Hong Kong’s Hang Seng and China’s CSI 300 lost 1.3 percent and 0.5 percent, respectively.

Japanese bank stocks continued a sell-off, with the Topix Banks Index falling 3.7 percent. Regional lenders Tochigi Bank and Keiyo Bank were hit the hardest, falling 5.4 percent and 3.6 percent, respectively.

Investors on Wall Street started selling bank stocks again on Wednesday, after the value of stocks and bonds at troubled lender Credit Suisse plummeted and refocused investor fears over bond portfolios of lenders worldwide.

Those losses came despite gains on Tuesday as fears of contagion from the collapse of tech-focused lender Silicon Valley Bank receded.

The S&P 500 ended down 0.7 percent, while the Nasdaq Composite was unchanged on Wednesday. JPMorgan Chase, the world’s largest bank by assets, fell 4.7 percent, while Morgan Stanley and Citibank both fell more than 5 percent. The KBW Nasdaq Bank index closed 3.6 percent lower.

San Francisco-based First Republic Bank, which was hit hardest by the aftermath of the SVB collapse, lost 21.4 percent.

Credit Suisse then announced Thursday it would borrow up to $54 billion from Switzerland’s central bank and buy back about $3 billion of its debt in a bid to halt a crisis engulfing the bank, whose shares closed 24.2 percent lower on Wednesday .

European markets reacted positively to the news, with futures contracts for the Euro Stoxx 50 and FTSE 100 rising 2.2 percent and 1.2 percent, respectively. Contracts for Wall Street’s S&P 500 rose 0.5 percent.

The US two-year Treasury yield, which is closely linked to interest rate expectations, rose 0.02 percentage point to 3.99 percent in Asian trading on Thursday, after falling 0.31 percentage point the previous day. The yield on the 10-year note also rose 0.02 percentage points to 3.51 percent. Yields move inversely with prices.

The turmoil in the banking sector had breathed new life into expectations that the US Federal Reserve would have to change course and ease its aggressive policy of rate hikes.