Asian stocks rise after US rebound amid Ukraine sanctions

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Japan’s benchmark Nikkei 225 jumped 1.4% in morning trade to 26,343.02. Australia’s S&P/ASX 200 gained 0.5% to 7,022.30. South Korea’s Kospi jumped 1.2% to 2,681.19. Hong Kong’s Hang Seng gained nearly 0.2% to 22,941.59, while the Shanghai Composite rose 0.8% to 3,456.39.

Japan announced additional sanctions against Russia, including freezing the assets of Russian groups, banks and individuals and suspending exports of semiconductors and other sensitive goods to military-linked organizations in Russia. .

Earlier in the week, Japan suspended new issuance and distribution of Russian government bonds in Japan, in a bid to reduce funding opportunities for Russia. He also banned trade with the two Ukrainian breakaway regions.

Despite the uncertainty over Ukraine, as well as concerns over inflation and the omicron variant of COVID-19, Wall Street’s turnaround appeared to support Asian stocks.

“The market pivot came after retaliatory measures against Russia were announced overnight, with the United States implementing export controls to cut off Russia from semiconductors and other technology. including software,” said Yeap Jun Rong, market strategist at IG in Singapore.

Beyond its tragic human toll, the conflict seemed poised to drive up prices at gas pumps and grocery stores around the world as prices for oil, wheat and corn soared. Russia and Ukraine are major producers not only of energy, but also of grain and various other commodities.

The rising cost of gas is likely to further hurt Asian economies, already reeling from the coronavirus pandemic. Japan imports almost all of its energy, although it does not import a significant amount from Russia.

Oil prices on both sides of the Atlantic briefly jumped above $100 a barrel to their highest levels since 2014. But they gave back much of their gains after Biden said the package sanctions is “specifically designed to allow energy payments to continue”. Biden also said he wanted to limit Americans’ economic pain.

Subsequently, the price of US oil settled at $92.81, up 71 cents for the day, well below the $100.54 it touched earlier in the day.

In Asia, benchmark U.S. crude jumped $2.45 to $95.26 a barrel. Brent crude added $2.32 to $101.40 a barrel.

Prices also rose for everything from fuel oil to wheat to gasoline. As with equities, the moves were more pronounced in Europe than in the United States, as its economy is more closely tied to Russia and Ukraine. The European spot price for natural gas jumped more than 50%.

Rising energy and food prices could amplify concerns about inflation, which in January hit its highest level in the United States for a few generations, and what the Federal Reserve will do in turn to contain it.

On Wall Street, the S&P 500 rebounded 1.5% after erasing an initial loss of 2.6%, while the Nasdaq made an even bigger comeback to end with a gain of more than 3%. The heaviest losses were in stocks in Europe, where officials called Russia’s actions a “brutal act of war”, with Germany’s DAX down 4%.

The US Fed looks certain to raise rates for the first time since 2018, with the only question being how quickly and aggressively it will act from next month.

In the past, the Fed has sometimes delayed major policy decisions due to uncertainty surrounding geopolitical events such as the Kosovo war and the US invasion of Iraq, according to Goldman Sachs. But the bank’s economists say they still expect the Fed to raise rates steadily at its upcoming meetings.

Tensions in Ukraine likely make it less likely that the Fed will start the process with a larger-than-usual rate hike, something some Fed officials had recently suggested.

“The Fed may become more concerned about the impact on economic growth and will likely want to move more cautiously,” said Kristina Hooper, chief global market strategist at Invesco.

The Fed was already grappling with the delicate task of raising interest rates enough to eradicate high inflation, but not enough to suffocate the economy into a recession. Evercore ISI strategists said the risk remains and has become even more complicated with the attack on Ukraine, but is “significantly greater in Europe compared to the United States”.

Many investors also said that past world events, such as an invasion, only had short-term effects on the markets.

With dwindling expectations for a bigger than usual rate hike, the stocks that tend to benefit the most from low interest rates led the way for the indices to pare their losses throughout the day. This shed light on big tech stocks; Amazon, Microsoft and Nvidia all rose 4.5% or more.

That helped the Nasdaq composite move from a 3.4% loss in the morning to a 3.3% gain by the end of the day, rising 436.10 points to 13,473.59. It was a remarkable turnaround after the Nasdaq was on track during the morning to close 20% below its record for the first time since the coronavirus pandemic collapsed the economy in 2020. Rate expectations Higher interest rates had weighed on strong growth and technology stocks for weeks.

“We’re seeing some attempt at bottom fishing here price-wise,” Haworth said. Such a “buy the dip” philosophy has proven profitable in the past, but he said he thinks it’s still “a bit early”. We just have a lot of uncertainty ahead of us.

The Dow Jones Industrial Average, which isn’t as influenced by big tech stocks, rose a more modest 92.07 points, or 0.3%, to 33,223.83. It recovered from an earlier loss of 859 points. The S&P 500 rose 63.20 points to 4,288.70.

Huge swings also rocked the bond market, where yields initially fell as money moved into investments that seemed to offer safer returns than stocks. But yields rallied during the day, and the 10-year Treasury yield was 1.96% at the end of the session, close to the 1.97% it was on Wednesday evening.

In currency trading, the US dollar fell slightly to 115.46 Japanese yen from 115.48 yen. The euro traded at $1.1203, little changed from $1.1204.

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AP Business Writers Stan Choe, Alex Veiga, Damian J. Troise, Kelvin Chan, Christopher Rugaber and Joe McDonald contributed.


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