Australia

Australian shares are set to drop today following losses across global markets. The collapse of Silicon Valley Bank last week sparked a crisis for the financial sector.

ASX futures were 116 points or 1.7% down as of 8:00am Tuesday, pointing to a steep decline at the open.

US stock indices ended mix on Monday while investors attempted to assess what newfound stress in the banking system will mean for Federal Reserve policy.

Regional bank stocks plunged, and investors piled into government bonds to seek safety after regulators took extraordinary measures over the weekend to limit the impact of the collapse of Silicon Valley Bank.

Some stock investors found a possible silver lining: The rescue plan appears to shift, at least for now, the calculus on the path of the Fed's interest rate increases. Some investors are even hoping the central bank will cut interest rates this year, a sharp shift from before the bank meltdown.

The S&P 500 closed down 0.2% and the Dow Jones Industrial Average lost 0.3%. The Nasdaq Composite managed to gain 0.5%.

Since Friday, derivatives traders have repriced the probability of interest rate increases at next week's Fed meeting. The most likely case at the coming meeting is for no increase, according to futures market bettors. Last week, they had expected 0.50-percentage-point raise.

Meanwhile, economists at Goldman Sachs Group said they still expect rate increases in May, June and July, ultimately pushing interest rates to 5.25% to 5.5%.

In commodity markets, Brent crude oil dipped 2.8% to $US80.48 a barrel while gold gained 2.3% to US$1,910.57.

Australian government bonds declined, with the 2 Year yield slipping to 3.24% and the 10 Year falling to 3.52%. US Treasury notes also lost, with the 2 Year dipping to 4.03% and the 10 Year declining to 3.57%.

The Australian dollar inched up to 66.72 US cents from its previous close of 65.80. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged down to 96.96.

Asia

Chinese shares finished broadly higher after a weak opening. Market sentiment was boosted by comments from the country's new premier, Li Qiang, who pledged to shore up growth and restore business confidence. Telecom and software companies led gainers. Both China Satellite Communications and China Mobile rose by the 10% daily limit. Beijing Kingsoft Office Software increased 7.0%. Auto stocks underperformed amid intensifying competition in the industry. BYD Co. dropped 1.1% and Great Wall Motor declined 5.8%. The benchmark Shanghai Composite Index rose 1.2% to 3268.70. The Shenzhen Composite Index was 0.4% higher and the ChiNext Price Index fell 0.6%.

Hong Kong's benchmark Hang Seng Index closed 1.95% higher at 19695.97 amid positive market sentiment. Telecom shares led gains, with China Unicom up 5.1% and China Mobile rising 4.6%. Tech companies also outperformed as the Hang Seng Tech Index advanced 2.9%. Baidu added 3.5% and Tencent Holdings rose 4.0%. HSBC Holdings was 0.2% lower, narrowing earlier losses after the bank said in the afternoon that it would buy the U.K. subsidiary of Silicon Valley Bank.

The Nikkei Stock Average of Japan lost 1.1% Monday. Banks led losses as investors worried about the impact of Silicon Valley Bank’s collapse last week.

India’s benchmark Sensex index closed 1.5% lower at 58237.85 amid weak global cues. Investors were likely keeping a watchful eye on the fallout of Silicon Valley Bank and its impact on domestic markets, ICICI Securities analysts said in a note. Local finance related stocks fell. Among lenders, IndusInd Bank was 7.5% lower, State Bank of India declined 3.2% and Bajaj Finserv fell 2.5%. Tech Mahindra was the index's sole gainer, rising 6.8% after it appointed an Infosys veteran as its chief executive.

Europe

European stocks fell in the wake of the collapse of US tech lender Silicon Valley Bank. The pan-European Stoxx Europe 600 lost 2.4%, the French CAC 40 dropped 2.9% and the German DAX slipped 3%. The British FTSE 100 index closed down 2.6%. Banks led losses across the continent.

"The real focus for now is on worrying about how far the crisis will spread. It wouldn't be a crisis without heavy falls for European banks, and the sector hasn't disappointed in that respect. Policymakers have not been too proactive thus far, but they may find the market forcing them into action fairly soon," IG analyst Chris Beauchamp said in a note.

Standard Chartered was the biggest faller on the FTSE, down 6.9%, followed by Barclays and Beazley, both down 6.3%. On the upside, Endeavour Mining was the day's biggest riser, up 4.2%.

"US stocks have had a busy start to the week, but have overall succeeded in making gains as the actions of US regulators provide some comfort to worried investors," Beauchamp wrote. "The same cannot be said of Europe, which is deep in the red as traders on this side of the Atlantic wait to see whether the pressure on European banks turns into something requiring authorities to step in."

North America

US stock indices ended mix on Monday while investors attempted to assess what newfound stress in the banking system will mean for Federal Reserve policy.

Regional bank stocks plunged, and investors piled into government bonds to seek safety after regulators took extraordinary measures over the weekend to limit the impact of the collapse of Silicon Valley Bank.

Some stock investors found a possible silver lining: The rescue plan appears to shift, at least for now, the calculus on the path of the Fed's interest rate increases. Some investors are even hoping the central bank will cut interest rates this year, a sharp shift from before the bank meltdown.

The S&P 500 closed down 0.2% and the Dow Jones Industrial Average lost 0.3%. The Nasdaq Composite managed to gain 0.5%.

Since Friday, derivatives traders have repriced the probability of interest rate increases at next week's Fed meeting. The most likely case at the coming meeting is for no increase, according to futures market bettors. Last week, they had expected 0.50-percentage-point raise.

Meanwhile, economists at Goldman Sachs Group said they still expect rate increases in May, June and July, ultimately pushing interest rates to 5.25% to 5.5%.

Former Goldman Sachs Chief Executive Lloyd Blankfein said on Twitter that he sees a potential slowdown in Fed increases as a tailwind for markets.

"Anxiety and volatility [are] high, but sharply lower interest rates and the Fed likely on hold are strong positives for markets," Mr. Blankfein said.

The Treasury Department, the Fed and the Federal Deposit Insurance Corporation guaranteed all deposits of SVB, which collapsed after an attempt to raise capital led to a bank run. Regulators also said they had taken control of Signature Bank, which serves many cryptocurrency companies.

The moves initially appeared to shore up wavering confidence in the American banking system. Stock futures ticked higher overnight, before selling intensified in European trading. Major stock indices in the US opened in the red before flipping higher.

"When the Fed raises rates so quickly, nine times out of 10, it breaks things. We may see more corporate failures, we may see more regional banks go under," said Edward Smith, co-chief investment officer at Rathbones.

Regional bank shares plummeted, with investors' confidence shaken. Larger banks fared better, but the S&P 500's financial sector still ended 3.8% in the red.

First Republic, Western Alliance Bancorp, and Metropolitan Bank were the worst performersin the US stock market, all dropping by more than 40%. The KBW Bank Index, which tracks 24 leading banks, tumbled 11.7%. Wall Street's fear gauge, the Cboe Volatility Index, jumped to its highest in five months, to 26.7.