In This Article:
*
China shares ease on geopolitical concerns, Nikkei slid
*
U.S. yields largely steady, heading lower for third week
*
Yen, euro post strong weekly gains; dollar near 7-week low
*
Markets price in aggressive rate cuts from Fed
By Stella Qiu
SYDNEY, March 24 (Reuters) - Asian shares were pressured on Friday after lingering banking stability concerns gripped Wall Street, while bonds bet the recent slew of rate hikes by central banks will be among the last of the cycle, allowing for policy relief later in the year.
The caution is set to extend to Europe, with pan-region Euro Stoxx 50 futures down 0.6%. Both S&P 500 futures and Nasdaq futures fluctuated between gains and losses and were last up about 0.2%.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2% on Friday, although it was heading for a still solid weekly gain of 2%. Japan's Nikkei also slid 0.2%.
Both China's blue-chip index and Hong Kong's Hang Seng lost 0.3%, with sentiment weighed by persisting geopolitical tensions between the world's two biggest economies.
The Biden administration on Thursday added 14 Chinese companies to a red flag list for exports, while U.S. lawmakers attacked TikTok for its ties with China, pushing further for a ban on the app nationwide.
Data on Friday showed Japan's manufacturing activity contracted for a fifth straight month in March, adding to evidence of sputtering global demand, while core consumer inflation in Japan eased, although price pressures persist.
On Wall Street, the Dow Jones closed up 0.2% and the S&P 500 rose 0.3%, after a bout of choppy trading late in the day. The Nasdaq Composite Index jumped 1%, as falling Treasury yields boosted shares of technology firms.
Treasury Secretary Janet Yellen said on Thursday that she was prepared to take further action to ensure bank deposits are safe, a day after saying that blanket insurance was not on the agenda, prompting a renewed sell-off in banking stocks.
"They're still struggling with what they will do in terms of uninsured bank deposits...that's what's partly given us the roller coaster ride a little bit in share markets," said Shane Oliver, chief economist at AMP.
"The bottom line is the Federal Reserve has raised interest rates aggressively, and they will invariably keep going until something breaks. But at the moment, they're not sure whether something's broken or not, despite the turmoil in banks."
Markets, however, have bet on a recession and incoming rate cuts. Every Treasury yield from one month to 30-years was under the overnight cash rate, a phenomenon that has in the past heralded a nearing recession.