BEIJING – Stock markets rose in Europe and Asia on Tuesday ahead of a Federal Reserve decision on another possible interest rate hike amid worries about global banks.
Shares rose by more than 1% in most major markets. Japanese markets were closed for a holiday. Oil prices rebounded.
Wall Street's benchmark S&P 500 index rose 0.9% on Monday after U.S., European and Japanese central banks announced measures to ease strains on the financial system, including lending more dollars if necessary.
The collapse of two U.S. banks and the takeover of troubled Credit Suisse have heightened fears other lenders might crack under the strain of repeated rate hikes to cool economic activity and inflation that is near multi-decade highs.
Traders expect the Fed to go ahead with another rate hike Wednesday but think it might be held to 0.25 percentage points, down from the 0.5 points previously expected.
“Can the Federal Reserve really continue to hike rates in the face of a banking crisis?" Clifford Bennett of ACY Securities said in a report. “There are ongoing stresses in the banking system that will only grow with further rate hikes.”
Germany's DAX gained 1.3% to 15,131.06 and the CAC40 in Paris jumped 1.5% to 7,115.32. Britain's FTSE 100 advanced 1.2% to 7,494.39. On Wall Street, the futures for the S&P 500 and Dow Jones Industrial Average were up 0.3%
In Asian trading, the Shanghai Composite Index gained 0.6% to 3,255.65 and the Hang Seng in Hong Kong advanced 1.4% to 19,258.76.
The Kospi in Seoul rose 0.4% to 2,388.35 and Sydney's S&P-ASX 200 surged 0.8% to 6,955.40.
New Zealand declined while Southeast Asian markets rose.
On Wall Street on Monday, the Dow industrials picked up 1.2% and the Nasdaq composite added 0.4% after Swiss regulators arranged Sunday for UBS to acquire rival Credit Suisse for almost $3.25 billion.
The surge in the Fed’s benchmark lending rate to a range of 4.5% to 4.75%, up from close to zero at the start of last year, caused prices of bonds and other assets on banks’ books to fall, raising concern about their financial health.
Credit Suisse's troubles came to a head last week as its stock price tumbled to a record low. Early Tuesday, its shares were down 1.9%.
Attention in the United States has focused on smaller and mid-sized banks like First Republic Bank, which has been at the center of investors’ crosshairs in the hunt for the industry’s next victim. Its shares fell 47.1% on Monday after S&P Global Ratings cut its credit rating for the second time in a week.
S&P said it could lower the rating even further despite a group of the biggest U.S. banks announcing last week they would deposit $30 billion in a sign of faith in First Republic.
New York Community Bancorp jumped 31.7% after it agreed to buy much of Signature Bank in a $2.7 billion deal. Signature Bank became the industry’s third-largest failure earlier this month.
In energy markets, benchmark U.S. crude picked up 24 cents to $68.06 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 90 cents on Monday to $67.82. Brent crude, the price basis for international oil trading, added 29 cents to $74.08 per barrel in London.
The dollar rose to 132.11 yen from Monday's 131.32 yen. The euro climbed to $1.0736 from $1.0724.