US Bank Jitters Spook Asia Stocks; Hong Kong Tumbles 3%

Concerns over the banking sector have spooked investors in Asia, with Hong Kong’s Hang Seng index falling by 3% in early trading on Tuesday. The sell-off follows a slide on Wall Street on Monday, which saw the S&P 500 index drop 1.5%.

Investors are worried about the impact of rising interest rates on banks’ profits, as well as the potential for a wave of loan defaults as the global economy slows down. This has led to a rally in safe-haven assets such as US government bonds, with yields falling to four-month lows.

The Bank of Japan held interest rates steady on Tuesday, despite mounting concerns over the global economic outlook. The central bank’s decision came as the yen fell against the dollar, following a slide in Japanese government bond yields.

Meanwhile, an economist has warned that central banks in Asia may not have much room to raise interest rates, amid slowing economic growth and declining inflation. This could limit their ability to respond to future economic shocks.

Global markets are keeping a close eye on the situation in Asia, as investors look for signs that the recent sell-off in stocks could spread to other regions.