Bank fears typically send Asia stocks down 102.3 KRMG

TOKYO — (AP) Asian stocks fell largely Thursday, following the decline on Wall Street, as concerns about the US banking sector and inflationary pressures weighed on investor sentiment.

The Japanese benchmark Nikkei 225 fell 0.2% in morning trading to 28,349.95. The Australian S&P/ASX 200 fell 0.4% to 7,288.70. The South Korean Kospi rose almost 0.1% to 2,486.90. The Hong Kong Hang Seng lost 0.1% to 19,730.31, while the Shanghai Composite added 0.3% to 3,274.59.

Asian stocks were lower on Thursday as banking sector turmoil threatens to deepen, ActivTrades’ Anderson Alves said in a market commentary.

On Wall Street, the S&P 500 fell 0.4% to 4,055.99. The Dow Jones Industrial Average fell 0.7% to 33,301.87, while the Nasdaq index led the market with a gain of 0.5% to 11,854.35.

Wall Street had its worst day in a month, hurt by concerns about the strength of US banks. The spotlights have been on the hardest Bank of the First Republic, which lost another 29.8% after nearly cutting in half the day before. Then it gave details of how many customers fled amid last month’s industry turmoil.

The concern is that it and other smaller and medium-sized banks could face debilitating customer deposits similar to those caused last month. failures from Silicon Valley Bank and Signature Bank. Even without more closures, the industry struggle could lead to a decline in bank lending, undermining the economy.

Activision Blizzardmeanwhile fell 11.4% after UK regulators blocked Microsoft’s acquisition amid concerns it would hurt competition in the cloud gaming market.

BIG TECHNICAL FLOWERS

While the majority of shares fell, gains ahead Microsoft and other Big Tech companies prevented a sharper slide for the market.

Microsoft rose 7.2% after stronger earnings for the first three months of the year than analysts had expected. It weighs heavily on the S&P 500 as the second largest stock in the index.

Technology stocks have outperformed some of the years to the extent that they have laid off employees and implemented other cost cutting measures to improve their profitability. Hopes that the Federal Reserve will pull out of its barrage of rate hikes have helped.

Google’s parent companyAlphabet, made a bigger-than-expected profit, but its stock fell 0.2% after its first back-to-back drop in ad revenue from a year earlier since it became a public company in 2004.

Soon more Big Tech companies will follow with their own reports. Facebook’s parent company, Meta Platforms, rose 0.9% ahead of its report. It jumped into after-hours trading after saying it earned more than expected.

WHY CHIPOTLE IS HIGHER

Chipotle Mexican Grill rose 12.9% for the biggest gain in the S&P 500 after a stronger-than-expected gain. It was one of the few companies to raise hopes that vital consumer spending could remain resilient despite a slowing economy.

Mark Haefele, Chief Investment Officer of UBS Global Wealth Management, expects stocks to remain within a certain range as they look relatively expensive and investors are concerned about a potential recession. That means the upside space appears limited in our view, he said.

Scott Wren, senior global market strategist at Wells Fargo Investment Institute, expects the S&P 500 to remain largely in the range of 3,700 to 4,200 this year. It’s in the upper half of that range and he said he has no intention of chasing this stock rally.

THE FED AND THE RATES

All banks are battling much higher interest rates, which have soared over the past year to tighten the economy and financial markets.

The Federal Reserve’s key overnight interest rate is at its highest level since 2007. High rates slow down the entire economy and depress prices for investments.

Aside from cracks in the banking system, high rates have slowed housing, manufacturing and other industries. Meanwhile, the labor market remains relatively solid.

A report on Wednesday showed orders for durable manufactured goods were stronger than expected in March.

In the bond market, the yield on the 10-year Treasury rose from 3.40% at the end of Tuesday to 3.43%. It helps set rates for mortgages and other loans. Two-year government bond yields, which are more in line with expectations for the Fed, fell to 3.92% from 3.95% at the end of Tuesday.

In energy trading, US crude added 13 cents to $74.43 a barrel in electronic trading on the New York Mercantile Exchange. Brent oil, the international standard, rose 24 cents to $77.93 a barrel.

In currency trading, the US dollar fell to 133.59 Japanese yen from 133.66 yen. The euro was priced at $1.1047, up from $1.1042.

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AP Business Writer Stan Choe contributed from New York.

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