SYDNEY: Asian shares struggled on Monday while U.S. and European stock futures edged higher on hopes authorities were working to ring fence stress in the global banking system, even as the cost of insuring against default neared dangerous levels.
Helping nerves were reports First Citizens BancShares Inc (FCNCA.O) was in advanced talks to acquire Silicon Valley Bank (SIVB.O) from the Federal Deposit Insurance Corp.
S&P 500 futures firmed 0.3% and Nasdaq futures 0.4%. EUROSTOXX 50 futures rallied 1.1% and FTSE futures 0.7%.
Japan’s Nikkei (.N225) gained 0.4%, but South Korea (.KS11) lost 0.3%. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) also eased 0.3%, led by a 0.9% drop in Chinese blue chips (.CSI300).
Shares in Chinese search engine giant Baidu (9888.HK) fell more than 3% after it cancelled a planned livestreamed product launch open to media and the public related to its ChatGPT-like Ernie bot.
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The mood remained jittery after shares in Deutsche Bank (DBKGn.DE) fell 8.5% on Friday and the cost of insuring its bonds against the risk of default jumped sharply, along with the credit default swaps (CDS) of many other banks.
“The current level of credit default swaps for European banks is just a little lower than it was during the height of the European financial crisis in 2013,” Naeem Aslam, chief investment officer at Zaye Capital Markets, said.
“If these CDS do not normalise, it is highly likely the stock market may continue to suffer for many days.”
Over in the United States, depositors have been fleeing smaller banks for their larger cousins or to money market funds. Flows to money market funds have risen by more than $300 billion in the past month to a record atop $5.1 trillion.
