Hang Seng Index, ASX200, Nikkei 225: Risk Aversion Bites

• It was another mixed morning for the Asian markets, with the Hang Seng Index, the ASX 200, and the Nikkei 225 succumbing to a flight to safety.
• Silicon Valley Bank (SVIB) contagion risk resurfaced, with Credit Suisse Group AG sending bank stocks into the deep red.
• Investors brushed aside economic indicators and easing bets of a 50-basis point Fed interest rate hike.

Market Overview

It was a bearish morning for the Asian markets. The Hang Seng Index and the ASX 200 hit reverse as investors fled riskier assets in response to the shift in focus from US regional banks to Credit Suisse Group AG (CS). Things were no better for the Nikkei 225.

Following the collapse of Silicon Valley Bank (SIVB) and Signature Bank (SBNY), contagion fears resurfaced on Wednesday. Credit Suisse Group AG (CSGN) slumped by 24.24% as investors responded to the bank’s largest shareholder stating it would not provide further financial assistance.

Swiss National Bank assurances of support failed to calm investor jitters this morning despite the NASDAQ Composite Index reversing losses in response. On Wednesday, the NASDAQ Composite Index rose by 0.05%, while the Dow and S&P 500 saw losses of 0.87% and 0.70%, respectively. This morning, the NASDAQ mini was up 48.75 points, with the Dow mini rising by 70.

Banking sector jitters muted the effect of weaker US economic indicators that led to a pullback in hawkish Fed bets. The producer price index fell by 0.1% in February versus a forecasted 0.3% increase. Retail sales figures were more disappointing, falling by 0.4% in February versus a forecasted 0.3% decline. Retail sales jumped by 3.2% in January.

With the sharp upward trajectory in interest rates hitting bank balance sheets, investors took no chances today. This afternoon, economists expect the ECB to raise interest rates by 50 basis points, with a hawkish outlook

ASX 200

The ASX 200 was down 1.60%. Impressive employment figures for February failed to cushion the downside as investors dumped banking and mining stocks.

ANZ Group (ANZ) was down 2.17%, with Westpac Banking Corp (WBC) and National Australia Bank (NAB) seeing losses of 1.99% and 1.50%, respectively. The Commonwealth Bank of Australia (CBA) saw a more modest 0.63% decline.

Mining stocks were also in the red. Rio Tinto (RIO) and BHP Group Ltd (BHP) slid by 3.69% and 4.12%, respectively, with Fortescue Metals Group (FMG) down 3.08%. However, Newcrest Mining (NCM) bucked the trend, rising by 1.28%.

Oil stocks responded to the slump in crude oil prices. Woodside Energy Group (WDS) and Santos Ltd (STO) were down by 5.72% and 3.84%, respectively.

Hang Seng Index

The Hang Seng was down 1.51% this morning.

Considering the main components, Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) fell by 1.57% and 2.13%, respectively.

However, it was a mixed morning for banking stocks. HSBC Holdings PLC slid by 2.72%, with Industrial and Commercial Bank of China (HK:1398) falling by 0.24%. China Construction Bank (HK: 0939) was flat this morning, bucking the bearish banking-sector trend.

CNOOC (HK: 0883) tumbled by 4.06% on the flight to safety. This morning crude oil prices steadied, with Brent rising by 0.68% to $74.19.

Nikkei 225

The Nikkei 225 was down 1.21% this morning, with positive economic indicators failing to distract investors. Machinery orders and trade data beat forecasts, suggesting an improving macroeconomic environment. However, the stats had no impact on investor sentiment.

Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group slid by 3.95% and 4.67%, respectively.

Looking at the main components, it was a sea of red. SoftBank Group Corp. (9984) and Fast Retailing Co (9983) fell by 1.95% and 1.49%, respectively, with Sony Corp (6758) and KDDI Corp (9433) seeing losses of 0.88% and 0.35%, respectively. Tokyo Electron (8035) bucked the trend, rising by 0.90%.

Check out our economic calendar for today’s economic events.