Shares in Asia slipped on renewed concerns about the health of the banking sector and ahead of a Federal Reserve decision Wednesday where policymakers are expected to add to their rate-hike cycle. MSCI Inc.’s Asia Pacific Index headed for its first loss in five days with benchmark indexes in Hong Kong, South Korea and Australia all declining.
Energy and banking shares were among the biggest losers. Markets are shut in Japan and mainland China for holidays, and there’s no trading of cash Treasuries in Asia hours.
The S&P 500 fell 1.2% in New York as US regional lenders PacWest Bancorp and Western Alliance Bancorp both tumbled at least 15%. That came just a day after JPMorgan Chase & Co.’s acquisition of First Republic Bank seemed to bolster confidence in the sector.
US futures ticked marginally higher in Asian trade. Swap traders are pricing a more than 90% probability the Fed will raise borrowing costs by 25 basis points later Wednesday, bringing the key rate to the highest since 2007.
Market pricing also indicates the increase will mark the peak of the tightening cycle before weaker growth prompts the central bank to cut rates later in the year. – Source: Bloomberg
