© Reuters. FILE PHOTO: A man is reflected in an electronic board displaying the share prices of various companies outside a brokerage house in Tokyo, Japan, February 22, 2022. REUTERS/Kim Kyung-Hoon/File Photo
by Wayne Cole
SYDNEY (Reuters) – Asian stocks struggled on Monday, while U.S. and European stock futures rose on hopes that authorities were working to limit stress on the global banking system, even as the cost of insuring against default It was approaching dangerous levels.
To help nerves, First Citizens BancShares Inc reports it was in advanced talks to acquire Silicon Valley Bank from Federal Deposit Insurance Corp.
firm 0.3% and Nasdaq futures 0.4%. EUROSTOXX 50 futures rose 1.1% and futures 0.7%.
it gained 0.4%, but South Korea lost 0.3%. MSCI’s broader index of Asia-Pacific stocks outside of Japan also fell 0.3%, led by a 0.9% drop in Chinese blue chip stocks.
Shares of Chinese search engine giant Baidu (NASDAQ:) fell more than 3% after it canceled a planned live-streamed product launch open to the media and public related to its ChatGPT-like Ernie bot.
The mood remained nervous after the actions in german bank (ETR:) fell 8.5% on Friday and the cost of insuring its bonds against default risk rose sharply, along with many other banks’ credit default swaps (CDSs).
“The current level of credit default swaps for European banks is only slightly lower than it was during the height of the European financial crisis in 2013,” said Naeem Aslam, chief investment officer at Zaye Capital Markets.
“If these CDS do not normalize, it is very likely that the stock market will continue to suffer for many days.”
In the United States, depositors have been fleeing smaller banks for their larger cousins or money market funds. Flows to money market funds have increased by more than $300 billion in the past month to a record $5.1 trillion.
PRICE FOR FED CUTS
Minneapolis Fed President Neel Kashkari said Sunday that officials were watching “very, very closely” to see if the banking stress was leading to a credit crunch that threatened to send the economy into recession.
That, in turn, meant the Fed was closer to a rate spike, he added. Markets are well ahead of the central bank in pricing around 80% chance that rates have already peaked, while a first rate cut is likely as early as July.
Fed Governor Philip Jefferson speaks later Monday while Fed Vice President for Supervision Michael Barr testifies on “bank supervision” before the Senate on Tuesday.
Two-year Treasury yields have fallen a staggering 102 basis points so far this month to 3.77%, while the entire 30-year yield curve is below the effective funds rate. of 4.85%.
That dip has at times been a drag on the dollar, at least against the safe-haven Japanese yen where it sits at 130.60 yen, having hit a seven-week low of 129.65 last week.
The Euro suffered its own reversal on Friday amid concerns over Deutsche, and was last at $1.0770 and well away from last week’s high of $1.0930.
The fall in yields has combined with risk flight into burnished gold, which was trading at $1,975 an ounce after peaking at more than $2,009 last week. (GOAL/)
Oil prices were little changed and are racking up losses of nearly 10% on the month as global growth concerns undermine commodities across the board. (EITHER)
it fell 1 cent to $74.98 a barrel, while it added 2 cents to $69.28 a barrel.
