Global stocks mixed after Wall St rebounds from bank jitters

BEIJING –

World markets were mixed Wednesday after Asian stocks rebounded while Europe opened lower and Wall Street futures declined.

London and Frankfurt declined. Shanghai and Tokyo closed higher. Oil prices rose by US$1 per barrel, recovering some of the previous day’s losses.

Wall Street’s benchmark S&P 500 index rose Tuesday as bank stocks recovered some of their losses caused by worries customers might pull out deposits following the collapse of two U.S. lenders.

That was despite data showing prices rose 6% over a year ago in February, decelerating from the previous month’s 6.4% but above the Federal Reserve’s 2% target.

“Measures of stress in financial markets have eased back from their spike on Monday — but remain elevated,” said ING economists in a report.

In early trading, London’s FTSE 100 lost 0.6% 7,591.73. The DAX in Frankfurt retreated 0.3% to 15,188.30 and the CAC 40 in Paris declined 0.7% to 7,094.06.

On Wall Street, the future for the benchmark S&P 500 index was up less than 0.1%. That for the Dow Jones Industrial Average gained 0.2%.

On Tuesday, the S&P 500 rose 1.7% and the Dow gained 1.1%. The Nasdaq composite added 2.1%.

Investors fear the Fed might respond to enduring upward pressure on prices by speeding up the pace of interest rate increases to dampen economic activity and inflation.

Those jitters were overshadowed by anxiety about the U.S. financial system following the collapse of Silicon Valley Bank on Friday and Signature Bank on Sunday. President Joe Biden and regulators have tried to assure the public that risks are contained and deposits in other banks are safe.

Tuesday’s data showed core inflation, with volatile energy and food prices stripped out to show a clearer trend, was 0.5% in February over the previous month, edging up from January’s 0.4% gain. The Fed pays close attention to core inflation in deciding on monetary policy.

The Fed faces a dilemma over how to respond when banks already are under strain after the fastest pace of rate hikes in a decade knocked down prices of their assets.

In Asia, the Shanghai Composite Index rose 0.6% to 3,253.31 after Chinese economic activity improved in January and February but less than expected following the end of anti-virus controls.

Retail sales rose 3.5% over a year earlier, rebounding from December’s 1.% contraction, government data showed. Factory output rose 2.4%, up from 1.3%.

The Nikkei 225 in Tokyo advanced less than 0.1% to 27,229.48 after major Japanese companies announced they had agreed with unions to the biggest wage increases in almost two decades. Low wages are seen as a major drag on economic growth in Japan, but fewer than one in five workers belongs to a union.

The Hang Seng in Hong Kong jumped 1.5% to 19,539.87. The Kospi in Seoul surged 1.3% to 2,379.72.

India’s Sensex shed 0.2% to 57,783.79. New Zealand and Southeast Asian markets advanced.

On Wall Street, First Republic Bank jumped 27% on Tuesday after plunging 67.5% over the prior three days. KeyCorp gained 6.9%, Zions Bancorp. rose 4.5% and Charles Schwab climbed 9.2%.

The yield on a two-year Treasury, or the difference between the market price and the payout at maturity, climbed back to 4.21% from 4.02% late Monday, another huge move. The yield on the 10-year Treasury jumped to 3.66% from 3.55%.

In energy markets, benchmark U.S. crude rose US$1.03 to US$72.36 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged US$3.47 on Tuesday to US$71.33. Brent crude, the price basis for international oil trading, advanced US$1.08 to US$78.53 per barrel in London. It lost US$3.32 the previous day to US$77.45.

The dollar gained to 134.68 yen from Tuesday’s 134.19 yen. The euro declined to US$1.0726 from US$1.0741.