SINGAPORE : Falling bank stocks drove Asian markets lower on Friday, while bonds rallied and expectations for U.S. interest rate rises were reduced after a surprise capital raising at a Silicon Valley startup lender unleashed fears of broader banking-system stress. The yen weakened after the Bank of Japan
SINGAPORE : Falling bank stocks drove Asian markets lower on Friday, while bonds rallied and expectations for U.S. interest rate rises were reduced after a surprise capital raising at a Silicon Valley startup lender unleashed fears of broader banking-system stress.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5 per cent to a two-month low, with banks and Hong Kong tech stocks leading losses. Fed funds futures also rallied strongly, pulling the market-implied peak in U.S. rates from above 5.6 per cent to just below 5.5 per cent, and pricing about a 50 per cent chance of a 50 basis point Fed hike this month, down from more than 70 per cent a day earlier.
"I think there's speculation that there are wider problems within the U.S. banking system, or there's that potential, and that's caused a re-think of Fed policy," said ING economist Rob Carnell in Singapore.
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