Stock markets were mixed on Friday, with worries about the health of the global banking system sending shares of U.S. lenders down more than 14% this week.
The FTSE All-World stock index fell 0.1% on Friday during Asian trading, but was up 1.6% for the week. Tech stocks in Asia initially followed the Nasdaq Composite higher on hopes that the US Federal Reserve’s monetary tightening cycle is coming to an end.
Hong Kong’s Hang Seng Tech index rose 2.3% on Friday before paring gains to just 0.1%. Other benchmarks in the region suffered minor losses, including a 0.3% decline for China’s CSI 300. Gains for tech stocks in Asia followed a 1% increase Thursday for the Nasdaq Composite Index.
Futures contracts tipped the FTSE 100 stock index to lose 0.6% at the open in London, while the S&P 500 was expected to rise 0.2%.
The broader S&P 500 gained just 0.3% as financial stocks struggled to recover after the collapse of Silicon Valley Bank in the US and rescue of Swiss lender Credit Suisse by rival UBS.
The KBW Nasdaq Bank Index ended Thursday’s session down 1.7%, even after comments from US Treasury Secretary Janet Yellen that regulators were “ready to take additional action if necessary” to ensure the security of bank deposits. The US banking index has lost nearly 30% over the past two weeks.
On Wednesday, the US Federal Reserve raised interest rates by 0.25 percentage points. On Thursday, the Bank of England also raised its key rate by 0.25 percentage point.
Citigroup strategist Dirk Willer said it was “too early to tell” whether banking sector stress has developed enough to have a significant impact on the US economic cycle. But he added that in light of the heightened uncertainty, the Fed had “become more cautious, as has the ECB.”
“We remain negative on risky assets as banking stress tightens credit and reaffirms Citi’s call for a US recession in [the second half] of 2023,” Willer said.
In the currency markets, the dollar index – which tracks the value of the greenback against a basket of other currencies – fell 0.1%, while yields on 10-year US Treasuries rose. fell 0.04 percentage points to 3.385%.