Stocks rise, dollar falls, as banking fears ease

HONG KONG, March 28 (Reuters) – Global stocks rose and the dollar softened on Tuesday as a deal backed by U.S. regulator First Citizens BancShares to buy failed Silicon Valley Bank eased broader concerns about problems in the sector.

MSCI̵[ads1]7;s broadest index of Asia-Pacific shares outside Japan ( .MIAPJ0000PUS ) rose 0.6% in early afternoon trading in Hong Kong. US stock futures, the S&P 500 e-minis, rose 0.1%.

Australian shares rose around 1%, as lithium and commodity shares rallied after battery metals explorer Liontown Resources ( LTR.AX ) rejected a $3.7 billion takeover bid from Albemarle Corp.

Top U.S. bank regulators said Monday they planned to tell Congress that the overall financial system remains on solid footing after recent bank failures, but that they will thoroughly review their policies in an effort to prevent future collapses.

As fears eased, demand for the safest assets also saw the US dollar index – which measures the currency against six peers – fall 0.14% to 102.6 in Asian trade, extending Monday’s 0.35% drop.

Asian currencies mostly strengthened, with the Malaysian ringgit at a five-week high.

Concerns haven’t completely disappeared, however, as Federal Reserve Governor Philip Jefferson said Monday that stress among small banks could hit small businesses the hardest.

“This round of uncertainty that we’re seeing, it’s likely to continue for some time,” said Manishi Raychaudhuri, Asia-Pacific head of equity research at BNP Paribas. – We have not seen the end of it. He expects continued volatility for global markets going forward for at least one or two quarters.

In addition to concerns about contagion caused by banking problems in developed markets, markets have also been pressured by wild swings in expectations about what central banks in the US and Europe might do next, Raychaudhuri said.

“On one day, the market might expect a rate hike of 25 basis points or maybe 50 basis points. In just one or two days, the outlook changes to a 50 basis point rate cut in the second half of the year,” he said.

In China, benchmark founder Jack Ma helped assuage some concerns in the private sector on Monday after a two-year regulatory backlash.

“Ma’s return to business will be a strong positive sign for China’s technology industry,” said Brock Silvers, chief investment officer at private equity firm Kaiyuan Capital.

“But the reason behind Ma’s appearance is not yet clear… Market watchers will quickly find out whether Ma’s visit was a one-off or perhaps something more,” he said.

In early European trade, Euro Stoxx 50 futures were up 0.32% in the pan, and German DAX futures and FTSE futures were both up around 0.3%.

On Monday, the S&P 500 finished slightly higher as a deal for Silicon Valley Bank’s assets helped boost banking stocks, while technology stocks fell amid profit-taking after a strong quarter.

U.S. Treasuries pared some losses by early Monday afternoon. Interest rates rose overnight on optimism that stress in the banking sector could be contained and as the finance ministry saw weak demand for a sale of two-year notes.

The benchmark 10-year yield fell to 3.5129%, down from Monday’s US close of 3.528%.

Two-year yields fell to 3.9324%. They are higher than the six-month low of 3.555% hit on Friday, but well below the nearly 16-year high of 5.084% reached on March 8.

On Tuesday afternoon, oil prices softened with US crude oil falling 0.08% to $72.75 a barrel. Brent oil fell to $77.79 a barrel.

Overnight oil prices rose more than $3 on Monday as a halt to some exports from Iraq’s Kurdistan region added to worries about oil supplies, while a US bank buyout eased concerns that financial turmoil could hurt the economy and reduce fuel demand.

Gold was slightly higher. Spot gold traded at $1,958.13 per ounce.

Editing by Sam Holmes

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