Asian Markets Fall as Banking Fears Boost Gold and Treasuries
Asian stocks fell on Friday, while U.S. Treasuries rallied and gold surged to a record high, as fresh signs of credit stress among regional U.S. banks rattled global investors and fueled expectations for further Federal Reserve rate cuts.
Banking Worries Pressure Global Markets
European shares were set to open sharply lower, with EURO STOXX 50 futures down 1% and FTSE futures dropping 1.1%. In the U.S., S&P 500 and Nasdaq futures slipped 0.6% ahead of more earnings reports from regional banks later in the day.
Overnight, Zions Bancorp plunged 13% after revealing a $50 million loss tied to two California loans, while Western Alliance Bank tumbled 11% following news of a fraud-related lawsuit.
“While the recent issues seem contained, the fixes from the 2023 crisis may have created the setup for another flare-up,” said Tony Sycamore, analyst at IG, referring to the banking turmoil that previously forced the Fed to take emergency action.
The renewed banking stress sent U.S. financial stocks lower and weakened the U.S. dollar, while investors flocked to safe havens like the Japanese yen and Swiss franc.
Treasuries and Gold Surge as Investors Seek Safety
Safe-haven demand drove U.S. Treasury yields to new lows, with the two-year yield falling 3 basis points to 3.389%, its lowest in three years. Markets are now pricing in two more rate cuts from the Federal Reserve this year.
Meanwhile, gold prices soared to an all-time high of $4,378.69 per ounce, on track for an 8.5% weekly gain — the biggest since September 2008, when the Lehman Brothers collapse triggered the global financial crisis. Silver also reached a new peak.
Rising Trade Tensions Add to Pressure
Market sentiment was further hit by renewed U.S.-China trade tensions. Beijing accused Washington of stoking panic over its rare earth export restrictions, rejecting calls from the White House to ease the curbs.
The MSCI Asia-Pacific index outside Japan fell 1%, while Japan’s Nikkei dropped 1.5%, led by declines in bank shares. Taiwan’s TSMC posted record profits and strong AI spending forecasts, yet the Taiwan index still fell 1.1%.
Chinese blue-chip stocks slipped 1.5%, and Hong Kong’s Hang Seng dropped 1.8%, reflecting broader regional risk aversion.
Dollar Slips as Yen and Franc Gain
The U.S. dollar index fell 0.2% to 98.10, heading for a 0.8% weekly decline, while the yen and Swiss franc strengthened 0.9% and 1.2%, respectively.
Bank of Japan Governor Kazuo Ueda said the central bank will carefully review data before deciding on any potential rate hikes this month.
Oil Extends Losses Ahead of Trump-Putin Meeting
Oil prices also weakened, extending Thursday’s declines after U.S. President Donald Trump confirmed plans to meet Russian President Vladimir Putin in Hungary to discuss a potential resolution to the Ukraine war.
U.S. crude slipped 0.4% to $57.25, while Brent crude eased 0.3% to $60.87 per barrel.
