Shares of Japan’s largest bank plunged Tuesday as global markets reacted to a plunge in the U.S. banking sector sparked by the collapse of technology-focused lender Silicon Valley Bank.
Traders in Tokyo said they expected a second day of heavy stock market support from the Bank of Japan after Japan’s Topix fell more than 3.1% in morning trading.
Shares of MUFG, Mizuho and SMFG fell 7.5% to 8.1% in early trading. Traders are betting that the collapse of the SVB could derail the Federal Reserve’s sharp interest rate hikes and undermine investors’ expectations of higher bank profits.
“A Fed rate hike is less likely, government bond yields are lower and the yen is stronger,” said Masatoshi Kikuchi, chief equity strategist at Mizuho Securities. That’s why I said.
The Bank of Japan announced Monday night that it has entered the Tokyo stock market for the first time since early December 2022, buying $5.2 billion worth of exchange-traded funds.
The Topix Banks index fell 7.6% on Tuesday, having its worst day in more than three years.
“If you see Topix falling below 2% on Tuesday, you can pretty much tell that the BOJ will be buying again. stockbroker said.
SoftBank fell 3.4% in early trading, believed to be one of the Asian companies analysts believe were most exposed to the broader tech industry’s impact caused by the SVB collapse. bottom. SoftBank’s biggest lender, Mizuho, lost more than 7.5% in value in morning trading.
South Korea’s Kospi fell 1.9%.of Hong Kong Hang Seng Index China’s CSI 300 fell 0.5%, down 0.9%.
Treasury bond prices fell on Tuesday, with the 10-year yield rising 3 basis points to 3.543% and the 2-year yield rising 2 basis points to 4.054%. Yield is inversely proportional to price.
It was the biggest one-day decline since 1987, following Monday’s 0.62 percentage point drop in two-year yields.
The latest moves have come despite efforts to insulate markets and depositors from the impact of SVB implosion in the US and UK.
The Federal Reserve Board Emergency rental facility It ensures all depositors can withdraw their funds on Sunday and the UK government HSBC to buy local department of the bank.
US President Joe Biden has tried to reassure the American public that the funds are safe, saying the country will do “whatever it takes” to avert a crisis.
US bank stocks plunged Monday despite regulatory intervention. The KBW Nasdaq Banking Index fell 11.7% in the US, with regional banks plunging the sharpest on concerns that smaller lenders could have more volatile balance sheets.
First Republic Bank dropped 61.8%, Western Alliance Bancorp dropped 47.1% and KeyCorp dropped 27.3%.
