Falling bank stocks drove Asian markets lower on Friday, while bonds rallied and expectations for U.S. interest rate rises were reduced after a surprise capital raising at a Silicon Valley startup lender unleashed fears of broader banking-system stress.
European and U.S. equity markets looked set to echo those losses when they reopen, with futures pointing lower.
The yen weakened and Japanese government bond yields plunged after the Bank of Japan opted to keep stimulus settings steady at Governor Haruhiko Kuroda’s last meeting in charge, as expected.
The benchmark 10-year JGB yield, which the BOJ pins within 50 basis points either side of zero, pulled back sharply from that ceiling to last sit at 0.445%. The yen was last down about 0.4% at 136.615 per dollar after a knee-jerk drop of as much as 0.6%.
Japan’s Nikkei (.N225) pared earlier losses to be down 1% after the central bank decision but selling began later in the session and the index was off 1.62% late in the day.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.7% to a two-month low, with banks and Hong Kong tech stocks leading losses. Australia’s benchmark index S&P/ASX200 (.AXJO) lost 2.28%.
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