Global markets decline and gold hits record high
Global stock markets fell sharply and gold hit a record high after two US regional banks said they had been exposed to millions of dollars of bad loans and alleged fraud. Signs of credit stress rattled markets across Europe and Asia. In London the FTSE 100 fell 1.5 percent, Germany’s Dax fell 2 percent, the Ibex in Spain was off 0.8 percent and France’s Cac 40 dropped 1.5 percent, before recovering some ground.
Concerns over credit stress in the network of loans to businesses across the world’s largest economy fuelled heavy losses on Wall Street on Thursday, followed by Asian markets, with Japan’s Nikkei 225 falling 1.6 percent and the Hang Seng in Hong Kong dropping 2 percent. US markets are expected to open down later on Friday.
Jittery investors turned to safe haven assets, with gold hitting a new record of $4,378 an ounce, a weekly gain of almost 8.5 percent, its biggest since the 2008 financial crisis.
China shares head for worst week
China stocks fell on Friday, set for the steepest weekly decline in 10 weeks, as investor caution over trade uncertainties and profit-taking in artificial intelligence shares dampened sentiment ahead of a key leadership gathering next week.
China’s blue-chip CSI300 Index dropped 1.3 percent by the lunch break, while the Shanghai Composite Index lost 1 percent. Hong Kong benchmark Hang Seng was down 1.6 percent.
The CSI300 index has shed 1.2 percent so far this week, on track for its biggest weekly loss since late-July, while the Hang Seng Index has lost 3 percent, set to extend losses from the previous week, if the current trend persists.
“Investor sentiment has largely shifted as the market turns volatile, with most in wait-and-see mode amid political ups and downs,” UBS analysts said in a client note.
Australian stocks slip
Australian equities pulled back on Friday from a record high notched the day before, as losses in energy and tech stocks outweighed gains in gold shares.
The S&P/ASX 200 index fell 0.3 percent to 9,043.80 by 2344 GMT after a three-session winning run, trimming its weekly gain to 0.9 percent.
The benchmark crossed the 9,100 level for the first time on Thursday after data showed the country’s unemployment rate rose to a near four-year high in September, bolstering bets of an interest rate cut next month.
The Reserve Bank of Australia will scrutinise the quarterly inflation report due later this month before taking a call on its key cash rate at the November 4 meeting.
Energy stocks were the biggest percentage losers on the benchmark with a 1.6 percent fall and were set for a third straight weekly decline, as uncertainty over global energy supplies weighed on crude oil prices.
Energy firms Woodside and Santos slipped 1.5 percent and 0.9 percent, respectively.
Technology stocks fell 1.1 percent, tracking Wall Street’s moves overnight as signs of weakness in regional banks spooked investors already on edge over US-China trade tensions.
Local tech firm WiseTech Global declined 1.1 percent. Miners slipped 0.3 percent after iron ore prices closed lower overnight, weighed down by expectations of falling demand in top consumer China.
Japanese stocks fall
Japanese shares fell on Friday, dragged by financial stocks which tracked sharp declines in US regional banks, while a stronger yen also hurt sentiment.
As of 0148 GMT, the Nikkei was down 0.5 percent at 48,044.41, after falling more than 1 percent decline earlier in the session. The broader Topix dipped 0.43 percent to 3,189.71.
Wall Street stocks ended lower as declining financial shares and simmering Sino-US trade tensions dampened investor sentiment, with Zions Bancorporation tumbling 13 percent after the regional bank disclosed an unexpected loss on two loans in its California division.
India stock benchmarks set to start flat
India’s equity benchmarks are poised for a muted open on Friday, following a recent rally driven by mounting optimism over a recovery in corporate earnings, while renewed US-China trade tensions are likely to temper investor sentiment.
Gift Nifty futures were trading at 25,613.5 points as of 7:50 a.m. IST, indicating that the benchmark Nifty 50 will open near Thursday’s close of 25,585.3.
The Nifty and BSE Sensex ended Thursday at three-month highs and now sit less than 3 percent below their record peaks reached in September 2024, fuelled by expectations of an earnings rebound and hopes for domestic and US rate cuts.
Asian stocks fall
Asian shares tracked Wall Street lower, bonds extended gains and gold hit a fresh record on Friday, with signs of credit stress at U.S. regional banks putting investors on edge.
Overnight, Zions sank 13 percent after disclosing it would take a $50 million loss in the third quarter on two loans from its California division. Western Alliance’s stock slumped 11 percent after it initiated a lawsuit alleging fraud by Cantor Group V, LLC.
“While the recent issues of the two lenders seems well contained, where there is smoke there is often fire and the remedy of the 2023 crisis has created a tinderbox for another banking flare-up,” said Tony Sycamore, analyst at IG.
Utilities lift Sri Lankan stocks
Sri Lankan shares closed higher on Thursday, boosted by gains in utilities and energy stocks. The CSE All Share index settled up 0.56 percent at 22,416.15.
Asia Capital PLC and Singhe Hospitals PLC were the top percentage gainers on the CSE All Share index, rising 24.6 percent and 4 percent, respectively. Trading volume on the CSE All Share index fell to 314.6 million shares from 390.9 million in the previous session.
The equity market’s turnover fell to 5.64 billion Sri Lankan rupees (USD18.62 million) from 5.74 billion rupees in the previous session, according to exchange data. Foreign investors were net sellers, offloading stocks worth 526.4 million rupees, while domestic investors were net buyers, purchasing shares worth 5.45 billion rupees, the data showed.