Asian stocks fall as Credit Suisse raises banking fears

Stocks fell on Thursday morning after U.S. and European shares tumbled as turmoil at Credit Suisse triggered fresh selling in the banking sector.

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

Shares of Japanese banks rose again, the Topix Banks index fell 3.7 percent. Regional lenders were hit hardest by Tochigi Bank and Keiyo Bank, which lost 5.4 percent and 3.6 percent, respectively.

Wall Street investors resumed selling bank stocks on Wednesday after a slump in the value of troubled lender Credit Suisse’s stock and bonds refocused investor concerns about lenders’ bond portfolios around the world.

Those losses came despite Tuesday’s gains as fears of a collapse at tech-focused lender Silicon Valley Bank eased.

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

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

Credit Suisse then announced on Thursday that it would borrow up to $54 billion from the Swiss National Bank and buy back about $3 billion of its debt in an attempt to stem the crisis surrounding the bank, whose shares closed down 24.2 percent on Wednesday.

European markets received the news positively, Euro Stoxx 50 and FTSE 100 futures contracts rose by 2.2 and 1.2 percent, respectively. Wall Street’s S&P 500 contracts added 0.5 percent.

The yield on the two-year US Treasury bill, which is closely related to interest rate expectations, rose by 0.02 percentage points to 3.99 percent during Asian trading on Thursday, after a decrease of 0.31 percentage points the previous day. The yield on the 10-year bond also jumped by 0.02 percentage points to 3.51 percent. Yields move inversely with prices.

The turmoil in the banking sector has breathed new life into expectations that the U.S. Federal Reserve will need to change and ease its aggressive rate hike strategy.