Asian shares retreat after worries over bank lending pull Wall St lower

Japan's Nikkei 225 fell 1.3 per cent to 47,646.31, tracking US losses as uncertainty over the choice of a new prime minister has also weighed on investor sentiment

Asian shares skidded Friday following a retreat on Wall Street driven by concerns over banks' loan portfolios.

US futures and oil prices also fell, while the price of gold climbed to over $4,383 an ounce as Washington and Beijing swapped harsh words over trade.

Japan's Nikkei 225 fell 1.3 per cent to 47,646.31, tracking US losses. Uncertainty over the choice of a new prime minister has also weighed on investor sentiment.

Conservative lawmaker Sanae Takaichi was elected to head the ruling Liberal Democratic Party but last week's collapse of its coalition with the Buddhist-backed Komeito cast doubt over whether she would garner enough support in the lower house of parliament to prevail in a vote expected next week.

 

Takaichi has led efforts to form a new alliance with the Osaka-based Japan Innovation Party, which would improve her chances of becoming Japan's first female prime minister.

In Chinese markets, shares fell as trade tensions with Washington intensified. Hong Kong's Hang Seng index slumped 1.6 per cent to 25,473.09, while the Shanghai Composite index slid 1 per cent to 3,877.20.

Traders also remained cautious ahead of Monday's release of economic data and an important meeting of the ruling Communist Party leadership next week.

South Korea's Kospi added 0.2 per cent to 3,754.28, lifted by optimism over progress in trade talks with the US.

Data released on Friday showed South Korea's seasonally adjusted unemployment rate slid to 2.5 per cent in September from 2.6 per cent in August.

Australia's S&P/ASX 200 lost 0.8 per cent to 8,993.80, retreating from the previous day's record high. Energy and tech stocks led the decline.

Taiwan's Taiex dropped 0.9 per cent, while in India, the Sensex rose less than 0.2 per cent.

On Wall Street, stocks fell Thursday as worries flared over the financial health of midsized banks.

The S&P 500 slid 0.6 per cent to 6,629.07, in its latest up-and-down day. The Dow Jones Industrial Average dropped 0.7 per cent to 45,952.24, and the Nasdaq composite lost 0.5 per cent to 22,562.54.

Salt Lake City-based Zions Bancorp. tumbled 13.1 per cent after the bank said its profit for the third quarter will take a hit because of a $50 million charge-off related to loans made to a pair of borrowers. Zions said it found apparent misrepresentations and contractual defaults by the borrowers and several people who guaranteed the loans, along with other irregularities.

Another bank, Western Alliance Bancorp, dropped 10.8 per cent after saying it has sued a borrower, alleging fraud. It also said it's standing by its financial forecasts given for 2025.

Scrutiny is rising on the quality of loans that banks and other lenders have broadly made following last month's Chapter 11 bankruptcy protection filing of First Brands Group, a supplier of aftermarket auto parts. The question is whether the hiccups are just a collection of one-offs or a signal of something larger threatening the industry.

The Street's been dining on rate cut and AI optimism for months, but this week the waiter brought something no one ordered: the return of the credit bogeyman, Stephen Innes of SPI Asset Management said in a commentary.

Regional banks have become the canaries in the credit coal mine, and their chirping sounds suspiciously weak, he said.

US companies broadly are under pressure to deliver stronger profits after the S&P 500 surged 35 per cent from a low in April. To justify those gains, which critics say made their stock prices too expensive, companies will need to show they're making much more in profit and will continue to do so.

In other dealings on Friday, benchmark crude oil lost 10 cents to $56.89 per barrel. Brent crude, the international standard, gave up 9 cents to $60.97 per barrel.

The US dollar fell to 150.10 Japanese yen from 150.44 yen. The euro rose to $1.1707 from $1.1688.