Global bank crisis fears ease after billion-dollar lifelines

Asian stock markets rise after moves to shore up confidence in troubled banks in Europe and the United States.

Fears of a global banking crisis have eased following the rollout of multi-billion dollar lifelines for troubled lenders in Europe and the United States, with Asia’s stock markets rebounding from earlier lows.

Stocks rose in China, Japan, South Korea, Malaysia, Australia, the Philippines and Hong Kong on Friday, following gains on Wall Street after the largest US banks unveiled a $30bn lifeline for troubled regional lender First Republic Bank.

MSCI’s most representative index of Asia-Pacific shares excluding Japan climbed 0.9 percent, reversing earlier losses, while Japan’s Nikkei 225 rose 0.5 percent.

China’s blue-chip index gained 0.8 percent, while Hong Kong’s Hang Seng jumped 1.2 percent.

Asian bank shares joined the gains, with the MSCI Asia Pacific Financials index climbing as much as 0.4 percent after earlier losses, Bloomberg reported.

Japanese banks including Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group were among the big gainers, rising as much as 2 percent, Bloomberg said.

“Expectations that a financial crisis has been averted, at least for now, has exerted downside pressure on yields and deprecated the US dollar,” Carlos Casanova, senior economist for Asia at UBP in Hong Kong, told Al Jazeera.

Asian markets fell on Thursday amid concerns about the financial health of Credit Suisse and the fallout of Silicon Valley Bank’s collapse stoked fears of a global banking crisis.

Financial authorities worldwide have been scrambling to prevent a financial crisis since last week’s sudden implosion of SVB, which failed after customers withdrew funds in response to steep losses the bank suffered from the sale of US government bonds.

On Thursday, US stocks rose after 11 US banks, including Bank of America, Citigroup and JPMorgan Chase, announced they would deposit $30bn into the California-based First Republic, which saw its stock price cater more than 70 percent early in the week.

“The actions of America’s largest banks reflect their confidence in the country’s banking system,” the banks said in a statement.

In Europe, markets were boosted by the European Central Bank’s decision to raise the benchmark interest rate by 0.5 percent amid concerns it could adopt a more hawkish stance.

Investors also welcomed the announcement that Credit Suisse, which has long been dogged by doubts over its financial health, would borrow up to 50 billion Swiss francs ($54bn) from Switzerland’s central bank to shore up confidence.