Asian Markets Ease, Yen Rises on Bank of America
Asian stocks were mostly lower while the yen rose Wednesday after news Bank of America needs $34 billion in fresh capital, sending shivers through investors ahead of official results of stress tests on U.S. banks due for release on Thursday.
U.S. S&P 500 futures were down 1 percent, indicating a lower market open later in the day on Wall Street, after a source familiar with the government test results on 19 banks told Reuters that Bank of America has been deemed to have additional capital needsworth nearly half its current market cap of $69.4 billion.
The yen strengthened across the board as dealers scrambled to relative safety, knocking the Australian dollar down despite much stronger-than-expected Australian retail sales numbers. Crude oil prices edged BELOW $54 a barrel, away from 2009 peaks on high inventories and falling demand.
South Korea's KOSPI closed 0.3 percent lower after hitting a fresh seven-month high earlier in the session, with exporters sinking on the won's sharp gains, but steelmakers advancing on hopes for China's economy.
Australian stocks fell 0.6 percent, reversing early gains, as news that Bank of America may need to raise $34 billion in extra capital sparked fresh financial sector worries. But Westpac Banking, Australia's second-largest bank, finished 2.3 percent higher despite weaker-than-expected earnings, as investors focused instead on the group's balance sheet strength.
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Hong Kong shares rose 2.5 percent as a rally in HSBC shares was countered by concerns of a likely selldown in a large Chinese bank by a foreign investor, while energy stocks fell on lower oil prices. China Construction Bank extended Tuesday's losses on expectations of a selldown in H-shares as the lock-in on 13.5 billion shares owned by Bank of America expires on May 7.
Singapore's Straits Times Index climbed 5.1 percent with banks swinging into positive territory after UOB and OCBC posted better-than-expected earnings, despite profits being weak. UOB and OCBC were both sharply higher.
China's Shanghai Composite Index rose 1 percent to a fresh nine-month intraday high, with property and coal shares strong while clean-energy and auto shares outperformed on signs of strength in those sectors.
Japanese markets remain closed for the Golden Week holidays, and will reopen on Thursday.