Financial Markets

Wall Street’s week of turmoil closed with drops for stocks. The S&P 500 fell 1.1% Friday, led by declines in First Republic and other banks. The Dow Jones Industrial Average and Nasdaq composite also pulled back. This week has been a whipsaw for global markets as concerns worsen about banks following the second- and third-largest U.S. bank failures in history. The fear is that the trouble for banks caused by fast-rising interest rates could drag the economy into a recession. Treasury yields sank again Friday in part on such fears, along with easing inflation expectations and falling confidence among U.S. households.

Asian stock markets have tumbled after Wall Street sank as a plunge in Credit Suisse shares reignited worries about a possible bank crisis following the failure of two U.S. lenders. Shanghai, Tokyo, Hong Kong and Sydney all dropped, reversing Wednesday’s gains. Oil prices edged higher. Wall Street’s benchmark S&P 500 lost 0.7% after following a 30% plunge in Credit Suisse’s share price. That fueled jitters about the strength of global banks that are under strain from interest rate hikes to cool inflation. Chinese shares declined after government data showed the Chinese economy is recovering more slowly than expected following the lifting of anti-virus controls.

Fears about the world banking system spread to Europe as shares in the globally connected Swiss bank Credit Suisse plunged. The steep drop on Wednesday dragged down other major European lenders in the wake of bank failures in the United States. At one point, Credit Suisse shares lost more than a quarter of their value. The stock price hit a record low after the bank’s biggest shareholder — the Saudi National Bank — told news outlets that it would not invest more money into the Swiss lender. Credit Suisse was beset by problems long before the U.S. banks collapsed.

Asian stock markets are higher after Wall Street stabilized following sharp declines for bank stocks and U.S. inflation edged lower. Shanghai, Tokyo, Hong Kong and Sydney advanced. Oil prices regained some of the previous day’s sharp losses. Wall Street’s benchmark S&P 500 index rose as bank stocks recovered some of their losses caused by worries customers might pull out deposits following the collapse of two U.S. lenders. Government data showed prices rose 6% over a year earlier in February, down from the previous month’s 6.4% but still far above the Federal Reserve’s 2% target. Investors had worried the Federal Reserve might respond to enduring upward pressure on prices by speeding up the pace of interest rate increases.

Asian shares have fallen in early trading as investors around the world watch to see what's next following the second- and third-largest bank failures in U.S. history. Benchmarks declined across the region and oil prices also fell. U.S. futures turned higher. In Asia, direct exposure to the risks from the U.S. failures appeared slim, at least so far. Still share prices for Japanese banks were sharply lower. MUFG fell 6.3%, Mizuho sank 5.8% and Sumitomo Mitsui Financial Group's shares dropped 6.2%. On Wall Street, bank issues fell but some stocks rose on hopes the Federal Reserve will take it easier on raising interest rates.

Oil giant Saudi Aramco says it earned $161 billion last year, claiming the highest-ever recorded annual profit by a publicly listed company and drawing immediate criticism from activists. The monster profit by the firm, known formally as the Saudi Arabian Oil Co.,  came off the back of energy prices rising after Russia launched its war on Ukraine in February 2022. Sanctions have limited the sale of Moscow’s oil and natural gas in Western markets. That profit, however, comes amid growing international concerns over the burning of fossil fuels accelerating climate change. Amnesty International criticized Aramco's profit due to that.

What might it take to get President Joe Biden and Congress to reach a deal on raising the debt limit? According to several economists and a former White House official, the financial markets might need to crash before lawmakers are forced to act. Every other time before, Congress has found agreement on the debt ceiling. The question now, in a period of ever-increasing political polarization, is whether today is different. Republicans and Democrats have been dancing around each other about the need to raise the government’s legal borrowing authority. That maneuvering could last for several more months until the last possible moment, when the federal government would hit a currently unknown “X-date” and be unable to pay its bills.

Asian stock markets are mixed after Wall Street steadied following a plunge on worries about more U.S. interest rate hikes. Shanghai and Seoul declined. Tokyo and Hong Kong advanced. Oil prices edged lower. Wall Street’s benchmark S&P 500 index recovered some of the previous day’s loss following Federal Reserve chair Jerome Powell’s warning rate that hikes might speed up because upward pressure on prices is stronger than expected. Investors worry the Fed and other central banks look increasingly likely to tip the global economy into at least a brief recession to extinguish stubborn inflation. U.S. inflation rose to 5.4% in January _ well above the Fed’s target of 2%.

Asian shares are mostly lower as investors fret that the Federal Reserve might raise interest rates faster if pressure stays high on inflation. Japan's benchmark Nikkei 225 rose slightly in morning trading, but shares sank in Sydney, Seoul, Hong Kong and Shanghai. Chinese shares sank after officials in Beijing announced plans for a regulatory shakeup. Oil prices were higher. Wall Street shuddered Tuesday after Fed Chairman Jerome Powell told lawmakers that the central bank would keep interest rates higher if need be to fight inflation. A Fed meeting later this month is expected to result in another rate hike.