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March 13, platform data showed that Asian investors significantly increased their trading activities outside the normal trading hours of U.S. stocks last year. After-hours trading platform Blue Ocean said that its after-hours trading volume quadrupled in 2024. About 80% of the companys revenue comes from Asian clients. The surge in after-hours trading by Asian investors reflects to some extent their demand for immediate reflection of macro news. Market participants believe that Trumps 24-hour social media habits have also contributed to peoples shift to after-hours trading. After-hours trading is becoming increasingly popular among retail and institutional investors in Asia. Liquidity provider Flow Traders said that since 2021, Asian institutional investors inquiry trading volume for U.S. stock ETFs has almost doubled. Rijlaarsdam, CEO of Flow Traders Asia, said: "Investors are forming a 24-hour trading mentality. Whether it is Trump tweeting or Nvidias financial report, the market demand for instant trading has increased significantly." Off-peak trading also has disadvantages. Compared with regular trading hours, night trading volume is still small and liquidity is much lower, resulting in a widening of the bid-ask spread.The Hang Seng Tech Index widened its losses to 1% in early trading, and the Hang Seng Index is now down 0.4%.The Hang Seng Index turned to decline, with the Hang Seng Tech Index now down 0.35%.Hong Kong-listed beverage stocks strengthened, with Cha Baidao (02555.HK) rising more than 4%, Mixue Group (02097.HK) rising more than 3%, and Gu Ming (01364.HK), Vitasoy Group (00345.HK) and others following suit.The Hang Seng Index in Hong Kong opened up 16.02 points, or 0.07%, at 23,616.33 points on March 13 (Thursday); the Hang Seng Technology Index opened up 22.27 points, or 0.38%, at 5,867.63 points on March 13 (Thursday); the CSI 300 Index opened up 8.77 points, or 0.1%, at 8,690.9 points on March 13 (Thursday); and the H-share Index opened up 8.61 points, or 0.22%, at 3,878.54 points on March 13 (Thursday).

After A Fed Rise, The U.S. Banks Stress Index Might Deteriorate

Aria Thomas

Jun 17, 2022 11:09

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An indicator of credit risk in the U.S. banking sector may be exhibiting symptoms of strain as the Federal Reserve's aggressive rate rise path heightens economic pain forecasts.


According to Refinitiv data, the so-called FRA-OIS spread, which measures the difference between the U.S. three-month forward rate agreement and the overnight index swap rate, jumped to 29.50 basis points on Thursday, its widest level since May 23. The value was -11.66 basis points earlier in the week.


Widely regarded as a barometer for banking sector risk, a wider spread indicates that interbank lending risk has increased.


The recent increase in the margin between forward rate agreements and overnight index swap rates is worrisome, according to J.P. Morgan Asset Management global market analyst Jordan Jackson. "As the Fed becomes more hawkish, recession fears increase, hence boosting the underlying credit risk."


The Federal Reserve hiked interest rates by 75 basis points on Wednesday, its largest rise since 1994. Markets have been rocked by the prospect of more dramatic tightening, and fears of a future recession have intensified.


This month, the central bank also started letting bonds to expire off its more than $8 trillion balance sheet without replacing them, a procedure known as quantitative tightening that Jackson warned may possibly deplete the financial system's liquidity.


As the world's biggest holder of U.S. government debt lowers its market presence, this sentiment is shared by other investors who are concerned that market conditions may deteriorate.


"Now that quantitative tightening has formally begun, reserve draining has been rather steady over the last several months," Jackson said, adding that he expects the FRA-OIS disparity to become much wider.


Wall Street also perceives an increase in the likelihood of default by large banks.


On Thursday, credit default swap (CDS) spreads for JP Morgan, Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), and Bank of America (NYSE:BAC) were nearing two-year highs.


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