Asian Stocks Surge As Banking Fears Subside

On Wednesday, Asian stocks surged dramatically as the dollar fell as easing fears about the banking sector boosted risk appetite, while Alibaba's stock rocketed on the internet behemoth's intentions to split into six sections.

MSCI's broadest index of Asia-Pacific equities outside Japan rose 0.82 percent, while the Nikkei in Japan rose 0.49 percent.

The Hang Seng index in Hong Kong rose more than 2%, boosted by Alibaba's announcement of its intention to split up. Alibaba's Hong Kong shares increased by 15%, while the company's US-listed shares increased by 14.3%.

The revelation boosted investor confidence in China's broader technology industry, with shares of Alibaba's e-commerce competitor JD.com Inc rising 7% and gaming behemoth Tencent Holdings Ltd rising 5%.

The CSI 300 index in China gained 0.4%.

After weeks of market volatility caused by the unexpected bankruptcy of two U.S. banks and the bailout of Credit Suisse in Europe, the sale of assets of failed lender Silicon Valley Bank and no fresh evidence of further stress in the banking sector eased investor worries this week.

"Markets have been pretty tranquil by recent standards due to the lack of any meaningful developments in the financial backdrop," said Taylor Nugent, an economist at National Australia Bank.

In the first congressional hearing examining the collapse of the two regional lenders in the United States, lawmakers grilled the Federal Reserve's top banking regulator on whether the central bank should have been more forceful in its oversight of SVB.

The Fed's vice chairman for supervision, Michael Barr, chastised SVB for spending months without a chief risk officer and for how it estimated interest rate risk.

"Investors have not totally lost their nervousness... and suggestions of a major regulatory revamp are likely to weigh on the industry until specifics emerge," said Robert Carnell, ING's Asia Pacific regional head of research.

Despite recent financial market upheaval, consumer confidence in the United States surprisingly climbed in March, according to a study released overnight, although Americans expect inflation to stay high over the next year.

Concerns over inflation have caused investors to rethink what they expect the Fed to do at its next meeting in May.

According to the CME FedWatch tool, markets are currently pricing in a 51% likelihood of the Fed holding interest rates steady at its next meeting, down from a 60% chance a day earlier.

The dollar index, which measures the US currency against six rivals, was basically steady in foreign exchange markets, having fallen 0.3% overnight due to improved risk appetite.

The euro was up 0.01 percent to $1.0844, while sterling was down 0.05 percent on the day at $1.2334.

After climbing 0.5% overnight, the Japanese yen fell 0.56 percent to 131.63 per dollar.

The Australian dollar lost 0.13 percent to $0.670 as inflation fell to an eight-month low in February, owing in part to a steep decline in holiday travel and lodging.

"Along with yesterday's lacklustre retail sales statistics, this may fuel ideas of a pause from the Reserve Bank of Australia at their next meeting, and perhaps that this tightening cycle has ended," said Carnell of ING.

In the commodities market, oil prices rose for the third day in a row as market mood improved and a stop to certain exports from Iraqi Kurdistan prompted fears about supply tightness. US crude was up 0.71 percent to $73.72 a barrel, while Brent was up 0.45 percent to $79.00.

After climbing 1% on Tuesday, spot gold fell 0.3% to $1,968.37 per ounce.