Asia’s stock markets returned mixed results on the first day of trading this week with rumours and counter-rumours flying around about the prospect of a Russian invasion of Ukraine and of imminent peace talks.
Warnings from US officials that Russia could invade its neighbour in coming days have sent markets spiralling over the past week and caused crude to surge towards $100 a barrel as traders fret over already tight supplies.
The crisis has compounded worries about inflation, which is sitting at a 40-year high and putting pressure on the Federal Reserve to hike interest rates with investors speculating over how fast and hard it will move.
Monday’s session started on a negative note, with markets suffering hefty falls but the losses were reduced after the US and Russian leaders said they would hold talks on Ukraine, as long as Putin does not invade.
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The news raised hopes for a peaceful conclusion to the standoff, though traders remain on edge.
Tokyo, Hong Kong, Seoul, Taipei, Manila and Bangkok were in the red, though Sydney, Mumbai, Singapore, Wellington and Jakarta edged up slightly. Shanghai was flat.
The benchmark Nikkei 225 index gave up 0.78%, or 211.20 points, to 26,910.87, while the broader Topix index slipped 0.71%, or 13.63 points, to 1,910.68.
The Hang Seng Index slipped 0.65%, or 157.64 points, to 24,170.07. The Shanghai Composite Index was flat, inching down 0.15 points to 3,490.61, while the Shenzhen Composite Index on China’s second exchange added 0.61%, or 14.01 points, to 2,325.80.
London, Paris and Frankfurt rose at the open and gold, a safe-haven asset in times of turmoil, slipped.
Fears Oil Could Hit $100 Mark
Oil dropped on easing fears about the possibility of supplies being hit by any conflict in eastern Europe, though surging demand as the global economy reopens continues to put upward pressure on the commodity.
Observers are warning $100 will soon be breached and could hold above that level for an extended period, even if talks on Iran’s nuclear programme succeed and lead to the resumption of Tehran’s crude exports.
The sharp rise in crude is a key driver of inflation across the planet, adding to supply chain snarls and bottlenecks.
While expectations are for a Fed rate hike next month, some bank officials at the weekend indicated they were not in favour of a 50 basis point rise, as has been suggested in light of consumer price hikes.
The prospect of higher borrowing costs this year has weighed on markets for months, bringing a near two-year equity rally to an end with commentators predicting further volatility down the line.
Key figures around 0820 GMT
Tokyo > Nikkei 225: DOWN 0.8% at 26,910.87 (close)
Hong Kong > Hang Seng Index: DOWN 0.7% at 24,170.07 (close)
Shanghai > Composite: FLAT at 3,490.61 (close)
London > FTSE 100: UP 0.5% at 7,550.61
New York > Dow: DOWN 0.7% at 34,079.18 (Friday close)
- AFP with additional editing by Sean O’Meara
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