Asian shares drop, gold hits record high

MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.9%, taking the week to negative territory

Asian shares declined, bonds extended gains and gold hit a new record on Friday.

MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.9%, taking the week to negative territory. Japan’s Nikkei slid 1% as its banking index declined.

Taiwan’s shares dropped 0.9% even after chipmaker TSMC posted a record quarterly profit and issued a rosy forecast for spending on artificial intelligence.

Both Chinese blue chips and Hong Kong’s Hang Seng slipped 1.4%.

The yen and the Swiss franc gained most, up 0.7% and 0.9% for the week.

Signs of credit stress at U.S. regional banks put investors on edge.

Overnight, Zions dipped 13% after disclosing it would take a $50 million loss in the third quarter on two loans from its California division. Western Alliance’s stock plunged 11% after it initiated a lawsuit alleging fraud by Cantor Group V, LLC.

While the recent issues of the two lenders seems well contained, where there is smoke there is often fire and the remedy of the 2023 crisis has created a tinderbox for another banking flare-up, said Tony Sycamore, analyst at IG.

The two developments pummelled U.S. banking stocks and weighed on the country’s currency to the benefit of the yen and the Swiss franc.

The flight to safety saw gold hit a record of $4,378 per ounce, although it ran into some profit-taking and was last flat. Even so, the bullion is set for a weekly gain of 7.6%, its biggest since early 2020. Silver also hit a new high.

Both S&P 500 futures and Nasdaq futures shed 0.3% ahead of more earnings from U.S. regional banks later in the day. European stock futures dropped 0.7%, while FTSE futures shed 0.9%.

Sentiment in equities has also taken a hit due to rising trade tensions between China and the US. China on Thursday accused the U.S. of stoking panic over its rare earth controls, rejecting a White House call to roll back the curbs.