SVB Contagion Fears Hammer Banks, Batter Asian Markets

Asia's share markets slid on Tuesday, with financial stocks in Tokyo leading losses as fear of a US banking crisis had investors fleeing the sector and slashing the interest rate outlook even ahead of US inflation data due later in the day, Tom Westbrook reported for Reuters.

Photo Insert: Markets remained nervous following the collapse of Silicon Valley Bank last week and the failure of New York's Signature Bank over the weekend even after the US government took steps to shore up systemic confidence.

Japan's Nikkei dropped 2.2%. The Tokyo Stock Exchange banks index fell more than 7%, setting it on course for its steepest drop in nearly six months. Bank shares in Singapore and Australia fell.

Hong Kong shares in HSBC and Standard Chartered dropped more than 5%.

Markets remained nervous following the collapse of Silicon Valley Bank last week and the failure of New York's Signature Bank over the weekend even after the US government took steps to shore up systemic confidence.

Heavy selling hit US regional bank stocks overnight and traders raced away from bets on US rate hikes, reckoning the instability would turn policymakers cautious. S&P 500 futures stabilized in Asia trade and were last up 0.4%.

Two-year Treasuries steadied after their biggest rally since 1987, and US interest rate futures eased slightly after soaring in New York when markets priced out any chance of a 50-basis point Fed hike next week.

"Bank runs have started (and) interbank markets have become stressed," said Damien Boey, chief equity strategist at Sydney-based investment bank Barrenjoey.

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