By Tom Westbrook
SINGAPORE, March 20 (Reuters) - U.S. stock futures rose
in Asian trade on Monday in relief at a weekend rescue deal for
Credit Suisse, though the mood was nervous and financial shares
remained under pressure from contagion fears, even with support
from global central banks.
S&P 500 futures rose 0.5% in bumpy early trade.
Japan's Nikkei futures bounced 0.6%.
Currency markets were broadly steady while U.S. interest
rate futures fell, as investors pushed U.S. rate expectations a
bit higher ahead of a Federal Reserve meeting on Wednesday.
U.S. Treasury futures fell and early indicators pointed
to volatile day for cash bonds.
Among equities, falls for Australian bank stocks led the S&P
ASX 200 down 0.8% in morning trade, with the financial
index down 1.4%.
In a little over a week, the fallout from the collapse of
Silicon Valley Bank - which has roiled confidence in the banking
system - has brought a globally systemic lender to its knees.
Over the weekend, UBS said it will buy Credit Suisse for 3
billion francs ($3.2 billion) and assume up to $5.4 billion in
losses, in a shotgun merger engineered by Swiss authorities.
Central banks including the Fed, the European Central Bank
and Bank of Japan pledged to deepen support for liquidity, by
increasing the frequency of seven-day dollar-swap operations
from weekly to daily.
"The best we can say was there are certainly a lot of
concerns about Credit Suisse contagion risk," said Rodrigo
Catril, a senior currency strategist at National Australia Bank
in Sydney.
"The news overnight from Switzerland has helped," he said,
though added that the central bank moves had calmed as well as
created nerves.
"It's the irony of good news reflecting how bad things are.
It's great we're seeing this concerted effort from central
banks, and it's positive, but it does also highlight how
troubling the circumstances are and how worried central banks
appear to be as well."
At least two major banks in Europe are examining scenarios
of contagion in the region's banking sector and are looking to
the Fed and the ECB for stronger signals of support, two senior
executives close to the discussions told Reuters.
Concern remains elevated, too, about regional banks in the
United States. On Sunday First Republic had its credit
rating pushed deeper into junk status by S&P Global and
elsewhere efforts to raise capital are hitting difficulties.
U.S. 10-year Treasury bond June futures fell 19
ticks in early trade as investors try and figure out what moves
to contain bank wobbles mean for global interest rates.
Pricing implies about a 60% chance that the Fed hikes rates
at its meeting later in the week, but has also priced in several
rate cuts by the end of the year.
In foreign exchange trade, the Swiss franc , which
took a beating as worries about Credit Suisse grew last week,
rose about 0.4% to 0.9264 to the dollar.
The yen traded steady at 131.87 per dollar. The
euro rose 0.1% to $1.1067.
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(Reporting by Tom Westbrook; Editing by Sam Holmes)
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