Asia Stocks Rally But Oil, Commodity Worries Still Weigh

 

Asian stocks advanced on Tuesday as the volatility that has gripped the markets since Russia invaded Ukraine eased slightly, though oil extended its gains with the United States poised to release reserves to temper prices.

With no let-up in the assault on its neighbour, Russia has been pummelled by a series of hard-hitting sanctions that have sent the rouble crashing, hammered its stock market and forced the central bank to more than double interest rates to 20%.

France’s finance minister warned on Tuesday that the raft of punishments “will bring about the collapse of the Russian economy.”

The crisis has also ramped up fears about supplies of crucial commodities from the region including wheat and nickel but particularly crude, just as demand surges owing to economic reopenings.

 

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Talks between Kyiv and Moscow did not appear to yield anything positive, while Vladimir Putin laid out to French President Emmanuel Macron his demands to end the war.

They include “the recognition of Russian sovereignty over Crimea, the demilitarisation and denazification of the Ukrainian state and ensuring its neutral status.”

The conflict provides an extra headache for global central banks, who will likely have to recalibrate their plans to tighten monetary policy as they try to support their economies.

Some observers have already eased their expectations for the Federal Reserve’s timetable of interest rate hikes. While this month is still tipped to see the first, few now forecast a big move.

On Wall Street the Dow and S&P 500 ended down but off earlier lows, while the Nasdaq was higher. Europe closed in the red.

But Asia enjoyed another positive day on Tuesday, with Tokyo, Singapore, Taipei, Manila and Wellington more than 2% up while Shanghai, Hong Kong, Sydney, Jakarta and Bangkok also rose.

The benchmark Nikkei 225 index added 1.20%, or 317.90 points, to end at 26,844.72, while the broader Topix index climbed 0.54%, or 10.24 points, to 1,897.17.

The Hang Seng Index edged up 0.21%, or 48.69 points, to 22,761.71. The Shanghai Composite Index added 0.77%, or 26.53 points, to 3,488.83, while the Shenzhen Composite Index on China’s second exchange put on 0.35%, or 8.16 points, to 2,326.25.

 

Oil Gains Subdued

US futures also rose, while London opened higher, though Paris and Frankfurt dipped.

“Markets may well feel that the worst of the bad news is now out there, especially on the sanctions front,” OANDA’s Jeffrey Halley said. “I am not so sure of that, but the market is always right, and we have to respect the momentum from a short-term perspective.”

Oil prices rose but the gains were more subdued than recent days as President Joe Biden considers tapping the vast US reserves to help mitigate the potential loss of Russia’s huge output.

However, analysts said the measure would not likely be enough and Goldman Sachs has warned prices could hit $115.

“Another round of releasing strategic crude reserves might be a temporary solution to rising prices as long as this Russia-Ukraine crisis isn’t resolved,” Will Sungchil Yun, senior commodities analyst at VI Investment Corp, said.

A meeting of OPEC and other major producers including Russia will be closely followed on Wednesday as they discuss whether to continue with their plan to lift output.

 

Key figures around 0820 GMT

Tokyo > Nikkei 225: UP 1.2% at 26,844.72 (close)

Hong Kong > Hang Seng Index: UP 0.2% at 22,761.71 (close)

Shanghai > Composite: UP 0.8% at 3,488.83 (close)

London > FTSE 100: UP 0.1% at 7,464.87

West Texas Intermediate > UP 1.4% at $97.09 per barrel

Brent North Sea crude > UP 1.7% at $99.65 per barrel

New York > Dow: DOWN 0.5% at 33,892.60 (Monday close)

 

• AFP with additional editing by Sean O’Meara

 

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