Asian shares fall on banking turmoil, recession worries

Shares fell on Friday in Asia as worries over turmoil in the banking sector and recession risks overshadowed gains on Wall Street.

Benchmarks declined in most major markets, while US futures were higher. Oil prices fell.

Investors are worried that more banks might suffer a debilitating exodus of customers following the second- and third-largest US bank failures in history.

That turmoil is clouding the outlook for what the Federal Reserve will do with interest rates after hiking them to market-rattling heights over the last year.

The fear is that all the turmoil in the banking industry could cause a sharp pullback in lending to small and midsized businesses around the country.

That could put more pressure on the economy, raising the risk for a recession that many economists already saw as likely.

Regional banks shares in Asia were modestly lower Friday, with HSBC Holdings plc losing 2.7 per cent in Hong Kong while mid-sized Japanese bank Resona Holdings declined 3per cent.

Shares in Japanese energy and electronics company Toshiba Corp. gained 4.3 per cent after it announced late Thursday that it had accepted a USD 15 billion tender offer from a buyout fund made up of the nation's major banks and companies.

If regulators approve it, the proposed buyout by private equity firm Japan Industrial Partners would be a major step in troubled Toshiba's yearslong turnaround effort, allowing it to go private.

Tokyo's Nikkei 225 index lost 0.1 per cent to 27,385.25 and the Kospi in Seoul gave up 0.4per cent to 2,414.96. Hong Kong's Hang Seng slipped 0.8 per cent to 19,885.45 and the Shanghai Composite index edged 0.1per cent lower, to 3,265.55.

Australia's S and P/ASX 200 shed 0.2 per cent to 6,955.20. Shares rose in Bangkok, Mumbai and Taiwan.

On Thursday, the S and P 500 added 0.3 per cent for its third gain in four days, closing at 3,948.72. The Dow Jones Industrial Average gained 0.2 per cent to 32,105.25 after seeing an early gain of 481 points evaporate.

The Nasdaq composite held up better thanks to strength in technology shares, gaining 1 per cent to 11,787.40.

Big technology and other high-growth stocks were among the strongest on Wall Street. Nvidia rose 2.7 per cent, and Microsoft gained 2 per cent.

Stocks fell sharply the day before after the Federal Reserve indicated that while the end may be near for its hikes to interest rates, it still doesn't expect to cut rates this year.

Fed Chair Jerome Powell also insisted the Fed could keep raising rates if inflation stays high.

Markets were also still mulling comments from Treasury Secretary Janet Yellen, who said the government is not considering blanket protections for all customers at all banks.

She did say the government will make all depositors whole at banks, on a case-by-case basis, if failing to do so would pose a risk for the broader system.

Implicit in that is perhaps the hint that any bank failure could be seen as such a systemic risk.

Failures at both Silicon Valley Bank and Signature Bank met that criteria. Depositors were promised all their money, even those with more than the USD 250,000 limit insured by the Federal Deposit Insurance Corp.

Stocks in the financial industry ended up being the heaviest weight on the S and P 500 despite rising in the morning. First Republic Bank fell 6 per cent after giving up a gain of nearly 10 per cent.

The Fed's Powell said such fears were part of the reason the central bank raised rates by only a quarter of a percentage point Wednesday instead of more. A pullback in lending could act almost like a rate hike on its own, he said.

In markets abroad, stocks in London fell 0.9 per cent after the Bank of England also raised its key rate by a quarter of a percentage point. Stocks were mixed elsewhere across Europe and Asia.

On Wall Street, shares of Coinbase Global fell 14.1 per cent after the cryptocurrency trading platform said it had been warned by the Securities and Exchange Commission that it could face charges of violating US securities laws.

In other trading Friday, US benchmark crude oil slipped 1 cent to USD 69.95 per barrel in electronic trading on the New York Mercantile Exchange. It gave up 94 cents to USD 69.96 per barrel.

Brent crude, the pricing basis for international oil, lost 5 cents to USD 75.45 per barrel.

The US dollar fell to 130.33 yen from 130.83 yen. The euro slipped to USD1.0831 from USD 1.0833.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)