Asian stocks fall, Europe gains after Credit Suisse jitters

A person wearing a protective mask walks in front of an electronic stock board showing Japan's Nikkei 225 index at a securities firm Friday, March 3, 2023, in Tokyo. Asian stock markets followed Wall Street higher Friday after a Federal Reserve official raised hopes the U.S. central bank might not step up its anti-inflation fight as much as feared. (AP Photo/Eugene Hoshiko)
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BEIJING (AP) — European shares advanced Thursday following a retreat in Asia after Credit Suisse said it would borrow up to $54 billion from Switzerland’s central bank to shore up its finances, possibly easing worries about a bank crisis following the failure of two U.S. lenders.

London, Frankfurt and Wall Street futures gained. Shanghai, Tokyo and Hong Kong declined as Asian bank stocks slid, reversing Wednesday’s gains. Oil prices rose.

Wall Street’s benchmark S&P 500 lost 0.7% on Wednesday after Credit Suisse shares fell 30%. That fueled jitters about global banks that are under strain following interest rate hikes by the Federal Reserve and other central banks to cool inflation.

“Expect confidence to remain fragile,” Chris Turner, Francesco Pesole and Frantisek Taborsky of ING said in a report.

The turmoil over banks will complicate a European Central Bank decision due to be announced Thursday about another possible interest rate hike, they said. It is “casting doubts on whether policymakers will raise rates at all,” they said.

In early trading, the FTSE 100 in London gained 1.4% to 7,447.53. The DAX in Frankfurt jumped 1.7% to 14,988.39 and the CAC 40 in Paris added 1.7% to 6,999.23. The Swiss Market index was up 1.2%.

On Wall Street, the future for the benchmark S&P 500 index was up 0.1%. That for the Dow Jones Industrial Average was unchanged.

On Wednesday, the Dow lost 0.9% and the Nasdaq composite closed up 0.1%.

In Asia, the Nikkei 225 in Tokyo retreated 0.8% to 27,010.61. Mizuho Bank was down 3.9%, while Resona Holdings, a major second-tier bank, lost 4.8%.

The Hang Seng in Hong Kong shed 1.7% to 19,203.91. Standard Chartered Plc lost 5.4% and HSBC was 2.4% lower.

The Shanghai Composite Index lost 1.1% to 3,226.89 after government data Wednesday showed the Chinese economy is recovering more slowly than expected following the lifting of anti-virus controls.

Search engine Baidu’s share price plunged 10% and eventually closed down 6.4% in Hong Kong after the company unveiled its rival to the Microsoft-backed ChatGPT in a pre-recorded rather than a live presentation.

China’s banks don’t face the same pressures as foreign lenders because Beijing has held its benchmark lending rate steady since mid-2022 and keeps the country sealed off from global capital flows. State-owned Industrial & Commercial Bank of China, Ltd. and Bank of China, Ltd. were up 0.1%.

The Kospi in Seoul was off less than 0.1% at 2,377.91 and Sydney’s S&P-ASX 200 sank 1.5% to 6,965.50.

Credit Suisse has been fighting troubles for years, including losses from the 2021 collapse of investment firm Archegos Capital.

Its share price plunge reignited worries about the global industry after Silicon Valley Bank and Signature Bank collapsed in the second- and third-biggest U.S. bank failures in history.

On Wall Street, bank stocks plunged Monday, recovered Tuesday and tumbled again Wednesday.

First Republic Bank sank 21.4%, a day after soaring 27%. JPMorgan Chase slid 4.7%.

Banks are struggling after the Federal Reserve’s fastest series of rate hikes in decades caused prices of assets on their balance sheets to decline.

Stress in the financial system could push the Fed to hold off on hiking rates at its meeting next week or at least refrain from the larger rate hike it had been potentially signaling. But inflation at 6% in February still is well above the Fed’s 2% target.

Weaker-than-expected economic reports released Wednesday may have allayed some of those worries.

One showed that inflation at the wholesale level slowed by much more last month than economists expected. It’s still high at a 4.6% level versus a year earlier, but that was better than the 5.4% that was forecast.

Other data showed that U.S. spending at retailers fell by more than expected last month. Such data could raise worries about a recession on the horizon, but they may also take some pressure off inflation in the near term.

In energy markets, benchmark U.S. crude gained 89 cents to $68.50 per barrel in electronic trading on the New York Mercantile Exchange. The contract plummeted $3.72 on Wednesday to $67.61. Brent crude, the price basis for international oil trading advanced $1.05 cents to $74.74 per barrel in London. It lost $3.76 to $73.69 the previous session.

The dollar declined to 132.87 yen from Wednesday’s 133.46 yen. The euro gained to $1.0615 from $1.0586.