Stocks Advance on Bank Rescue; Dollar Declines: Markets Wrap

US and European equities futures advanced with Asian shares Friday after a rescue package for First Republic Bank soothed concerns over financial stability.

(Bloomberg) — US and European equities futures advanced with Asian shares Friday after a rescue package for First Republic Bank soothed concerns over financial stability.

Indexes rose in Hong Kong, Japan and Australia amid a rebound in banking shares. Even so, an Asia equity gauge was set for a second weekly loss after the recent turbulence in the banking sector.

Technology stocks were among the best performers on Friday, with the Hang Seng Tech Index jumping more than 4%. Baidu Inc. surged nearly 18%, adding to the positive sentiment after brokerages tested its just-unveiled ChatGPT-like service and granted it their preliminary approval. 

The moves in Asia followed the S&P 500 notching its largest one-day advance since January on Thursday as the biggest US lenders agreed to contribute $30 billion in deposits to First Republic. That eased speculation that the bank could be the next to fail after two high-profile demises touched off the crisis last week. 

The dollar weakened against all of its Group-of-10 counterparts, with the Australian currency leading gains. 

Treasury yields fell slightly across tenors after the two-year jumped 27 basis points to above 4% in the previous session. Traders who on Wednesday had largely abandoned bets for a ninth Fed rate hike next week upgraded the odds of a quarter-point move back to around 80%. 

Markets were also digesting a 50 basis points rate hike by the European Central Bank and comments from the ECB president that inflation is projected to remain too high for too long. The ECB rate hike added to bets the Federal Reserve will also raise next week.

Friday’s quarterly triple witching, where contracts for index futures, equity index options and stock options all expire, could amp up swings in trading.

“The Fed is threading a needle here” as strong consumer spending continues to fuel inflation, Jenny Johnson, CEO of Franklin Templeton, said on Bloomberg Television. “I’d be surprised if they didn’t do 25 in March because suddenly you’d have to catch up again.”

The First Republic news came after a lifeline from Swiss regulators earlier this week stabilized Credit Suisse Group AG, easing worries that troubles at the European lender would lead to a cascading crisis in that region.

The idea of a forced combination with a larger rival, UBS Group AG, was shot down on Thursday and receipts in Credit Suisse ended the session unchanged. The cost to insure the Swiss bank’s debt has been rising.

BlackRock Investment Institute does not expect cracks in the financial sector to deter central banks from raising rates further to contain inflation. It expects both the ECB and the Fed to “go as far as possible to distinguish their inflation fighting campaigns from measures to deal with bank troubles and safeguard the financial system,” a team of BlackRock analysts wrote in a note.

In China, traders were able to access widely used bond price feeds again after an abrupt suspension of the data earlier in the week roiled the $21 trillion market.

Bitcoin rose to near the highest level since June amid a broad rally in cryptocurrencies. Other tokens such as Ether, Solana and Polkadot surged as well.

Elsewhere, oil advanced but was still headed for the worst week so far this year after the recent turmoil in the financial sector. Gold rose.

Stocks

  • S&P 500 futures were little changed as of 6:45 a.m. London time. The S&P 500 rose 1.8%
  • Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 2.7%
  • Euro Stoxx 50 futures rose 0.5%
  • Japan’s Topix index rose 1.2%
  • Hong Kong’s Hang Seng Index rose 1.3%
  • China’s Shanghai Composite Index rose 0.7%
  • Australia’s S&P/ASX 200 Index rose 0.4%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.3%
  • The euro rose 0.4% to $1.0648
  • The Japanese yen rose 0.5% to 133.01 per dollar
  • The offshore yuan rose 0.3% to 6.8729 per dollar
  • The Australian dollar rose 0.8% to $0.6707
  • The British pound rose 0.4% to $1.2151

Cryptocurrencies

  • Bitcoin rose 5.8% to $26,190.91
  • Ether rose 4% to $1,725.48

Bonds

  • The yield on 10-year Treasuries declined three basis points to 3.54%
  • Japan’s 10-year yield declined one basis point to 0.27%
  • Australia’s 10-year yield advanced six basis points to 3.39%

Commodities

  • West Texas Intermediate crude rose 0.3% to $68.58 a barrel
  • Spot gold rose 0.6% to $1,931.19 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Carly Wanna, Angel Adegbesan and Rob Verdonck.

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