Asian bank equities fell across the region on Tuesday, led by a steep decline among Japanese lenders, after Bank of America signalled weaker revenue for its sales and trading and investment-banking businesses in the third quarter. The move compounded investor concerns driven by rising bond yields and expectations for additional rate hikes.
In Tokyo, large banks were among the worst performers. Sumitomo Mitsui Financial dropped 2.7%, Nomura slid 2.6%, Mizuho Financial lost 2.4% and Mitsubishi UFJ Financial declined 1.8%. Resona Holdings fell 3.5%.
Weakness was not limited to Japan. Major Chinese and international lenders listed in the region also recorded losses: China Merchants Bank was down 2.5%, HSBC fell 2.2%, China Construction Bank slipped 2.3% and Bank of China declined 2% in Hong Kong trading. Singapore's OCBC retreated 2% and UOB dropped 1.9%. Australian banks softened as well, with National Australia Bank off 1.6%, Commonwealth Bank of Australia down 1.4% and ANZ lower by 1.2%.
The regional selloff followed losses among U.S. financial stocks after comments from Bank of America Chief Executive Brian Moynihan. He said the bank's third-quarter sales and trading revenue would be roughly flat compared with a year earlier, and that investment-banking fees were likely to decline by at least 10% to between $1.6 billion and $1.8 billion, versus about $2 billion a year earlier. He also warned that higher interest rates could further dampen financing demand. On that session, Bank of America shares fell 5.1% and other major U.S. banks, including Goldman Sachs and Morgan Stanley, also slipped. The KBW Bank Index fell roughly 1.9%.
Japanese lenders faced an additional headwind from a rise in government bond yields. Japan's 10-year yield moved above 3% as market participants increasingly priced in a Bank of Japan policy-rate increase to 1.25% at its meeting this week. While higher policy rates can support net interest income over time, the rapid increase in yields can also create pressure for bond portfolios and reduce financing activity.
Traders and investors also rotated within U.S. equities, shifting away from financials and toward software-focused names linked to artificial intelligence. Software companies outperformed following the bank results; Adobe and Salesforce gained, while cybersecurity firm CrowdStrike surged to a record high.
Sectional market moves shown in the session included benchmark and individual stock declines across Asian exchanges, echoing the tone set by comments on revenue prospects from a major U.S. bank and the contemporaneous rise in sovereign yields. The confluence of weaker trading and dealmaking outlooks, rising rates and a U.S. sector rotation contributed to the broad-based pullback in banking shares across the region.