Bonds Rise & Stocks Fall Amid US Bank Credit Issues – Asia Market Wrap

Stocks plummeted, and investors sought refuge in government bonds, as shares of US regional banks sank on concerns over lending standards. Gold was set for its seventh week of gains.

The MSCI Asia Pacific Index lost 0.8%, with financial firms among the hardest hit. Following Thursday’s decline in the underlying measures, US equity-index futures sank 0.4%. Contracts showed that European equities would open lower as well. Regional lenders fell in the US as the effects from the failure of subprime auto lender Tricolour Holdings went beyond Wall Street.

As investors sought safe havens, gold and silver reached fresh all-time highs, fuelled by concerns over credit quality in the US economy and US-China trade tensions. Treasuries extended their advances, with the two-year yield falling to its lowest level since 2022 and the 10-year yield below 4%. The Dollar index fell, while the yen rose above 150 against the Dollar. The Swiss Franc also increased.

Meanwhile, BoJ’s Ueda stated that the bank will continue to normalise policy if confidence in its economic outlook improves, leaving the door open for a near-term interest rate hike. Also in Japan, the likelihood of the ruling LDP forming a new coalition with opposition party Ishin is 50-50, according to the leader of the smaller party on Friday, as vital talks continue ahead of a legislative vote on who will lead the country.

Oil was set for a third weekly decrease as investors concentrated on oversupply and the consequences of renewed US-China trade tensions. Brent traded at $61 per barrel as Trump announced a second meeting with Putin, heightening the possibility that an increase in barrels from the OPEC+ member may exacerbate a global surplus.