DStv Channel 403 Friday, 04 October 2024

Asian markets extend global rally as banking sector fears ease

Traders globally have breathed a sigh of relief at steps to support struggling banks

BEIJING - Asian markets rose on Friday, tracking New York and European equities, as traders welcomed multi-billion-dollar shows of support for troubled banks aimed at soothing concerns about contagion in the sector.

A rollercoaster week was on course to end on a positive note after several Wall Street titans including JP Morgan, Bank of America and Citigroup stumped up $30-billion to deposit into troubled First Republic.

The move came as investors feared the lender could suffer a run of withdrawals by customers worried it would follow Silicon Valley bank and Signature Bank, which went under last week and fuelled fears of another financial crisis.

"The actions of America's largest banks reflect their confidence in the country's banking system," the group of 11 banks said of a plan that was coordinated by US regulators.

Earlier, European giant Credit Suisse said it would borrow nearly $54 billion made available by the Swiss central bank to "support" the group.

Markets welcomed the measures, helping the Dow and S&P 500 rally more than one percent and the Nasdaq more than two percent, while London, Paris and Frankfurt were also sharply higher.

"Worries over the banking sector are easing after the big banks offer support to First Republic and as the SNB gave Credit Suisse a lifeline," said OANDA's Edward Moya.

"Banking jitters are fading quickly for now and that has everyone scrambling back into risky assets."

In early trade, Hong Kong rose more than one percent while Tokyo, Shanghai, Sydney, Seoul, Taipei, Manila and Jakarta were also in the green.

However, Meera Pandit, of JPMorgan Asset Management, warned that while there was much relief, traders must remain wary.

"That the market is reacting relatively positively to the fact that we are applying some guardrails here shouldn't necessarily be a catalyst for markets to move much higher," she told Bloomberg TV.

"There is still some vulnerability here to a correction because we don't know how this continues to evolve."

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