Global shares mostly rise on relief over U.S. bank strength

TOKYO –

Global shares were mostly higher on Tuesday as investors got some relief from worries over troubled U.S. lenders from a takeover of failed Silicon Valley Bank.

France’s CAC 40 added 0.5% to 7,116.72 in early trading. Germany’s DAX rose 0.4% to 15,191.93. Britain’s FTSE 100 gained 0.4% to 7,504.04. The future for the Dow Jones Industrial Average gained 0.1% while the future for the S&P 500 was virtually unchanged.

Asian shares finished higher. Japan’s benchmark Nikkei 225 edged up 0.2% to finish at 27,518.25. Australia’s S&P/ASX 200 jumped 1.0% to 7,034.10. South Korea’s Kospi added 1.1% to 2,434.94. Hong Kong’s Hang Seng rose 0.9% to 19,751.94, while the Shanghai Composite slipped 0.2% to 3,245.38.

“Asian equities were positive on Tuesday, lifted by mostly higher major indices in the previous session. Receding fears surrounding the banking crisis and surging oil prices led to solid risk-taking flows,” Anderson Alves of ActivTrades said in a report.

Markets have been in turmoil following Silicon Valley Bank’s collapse, the second-largest U.S. bank failure in history, earlier this month, and then the third-largest failure, by New York-based Signature Bank.

On Monday, the S&P 500 eked out a 0.2% gain led by bank and energy stocks. The Dow industrials rose 0.6%, while the Nasdaq composite fell 0.5%, reflecting losses in Google parent Alphabet and other tech companies.

Investors have been hunting for which banks could be next to fall as the system creaks under the pressure of much higher interest rates.

A broader worry has been that all the weakness for banks could cause a pullback in lending to small and midsized businesses across the country. That in turn could lead to less hiring, less growth and a higher risk of a recession. Many economists were already expecting an economic downturn before all the struggles for banks.

The Federal Reserve has pulled its key overnight rate to a range of 4.75% to 5%, up from virtually zero at the start of last year. It indicated last week that the troubles in the banking system could end up acting like rate hikes on their own, by slowing lending.

Huge, quick swings in expectations for the Fed have caused historic-sized moves in the bond market.

Yields jumped Monday in their latest lunge. The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, rose to 3.53% from 3.37% late Friday. It was above 4% earlier this month.

In energy trading, benchmark U.S. crude added 43 cents to US$73.24 a barrel in electronic trading on the New York Mercantile Exchange. It gained $3.55 to $72.81 per barrel on Monday.

Brent crude, the international standard, rose 24 cents to $78.36 a barrel.

In currency trading, the U.S. dollar fell to 131.17 Japanese yen from 131.56 yen. The euro cost $1.0823, up from $1.0804.