MORNING BID ASIA-Classic safe havens the winners as crisis goes global - News Tech Review

MORNING BID ASIA-Classic safe havens the winners as crisis goes global

A look at the day ahead in Asian markets from Jamie McGeever.

There’s no doubting it now – Credit Suisse has made the banking crisis global and, in classic financial crisis mode, investors are rushing for the global safe havens of the U.S. dollar, U.S. Treasuries and Japanese yen. There are major economic data releases from Asia on Thursday – New Zealand GDP, Japanese trade, Australian unemployment and an Indonesian rate decision – but all that will be subsumed by the ferocious volatility sweeping through world markets.

Indeed, the most important driver for Asian markets on Thursday may come from Frankfurt. The European Central Bank (ECB) was on track to raise rates by 50 basis points, but can it be so aggressive – can it tighten at all – in light of Wednesday’s tumultuous events? A cynic might point out that the ECB has form for failing to grasp the enormity of an unfolding financial crisis and raising interest rates. Not once, but twice.

Asian markets are likely to open under severe pressure on Thursday, even though Wall Street closed off its lows – the Nasdaq even ended up slightly – after the Swiss National Bank said it would provide Credit Suisse liquidity “if necessary.” Even if a full resolution for Credit Suisse is announced and markets surge in a relief rally on Thursday, financial crises are not resolved in a few days. Remember, Bear Stearns was rescued in March 2008, oil rose to a record high and the ECB raised rates that July, and Lehman wasn’t until September.

Debate is intensifying on the roots of the banking crisis – solvency, liquidity or asset…

You may also like...