Asian stocks hit 16-month lows due to fire at Ukraine nuclear plant

SINGAPORE (Reuters) – Asian shares and the euro fell on Friday, while oil prices jumped as investors feared news of a nuclear power plant on fire amid heavy fighting between Ukrainian and Russian forces.

Risk-off appetite has hit markets across the region, sending Wall Street futures lower as well, indicating more pain for European and US markets when they open later in the day.

The RIA news agency quoted the Ukrainian Atomic Energy Ministry as saying that a generating unit at the Zaporizhzhya nuclear power plant, the largest of its kind in Europe, was bombed during an attack by Russian forces.

While prices have since pared losses from morning lows after reports of no immediate change in radiation levels in the region, investors remain very concerned.

“Markets are concerned about the nuclear fallout. The risk is that there is a miscalculation or an overreaction and the war drags on,” said Vasu Menon, executive director of investment strategy at OCBC Bank.

MSCI’s broadest index of Asia Pacific shares, excluding Japan (MIAPJ0000PUS.) It fell as much as 1.6% to 585.5, the lowest since November 2020, taking losses to date to 7%. It regained some losses but remained down 1.4%.

“Markets do not want the impact of infection and more European countries affected by the crisis,” Menon said. “If investors are looking to buy, they need to have a strong, long-term appetite for risk.”

Stock markets across Asia were in a sea of ​​red, with Japan (.N225) A loss of 2.6%, South Korea 1.3%, China (.SSEC) 0.7% and Hong Kong 2.7%, while Australia is heavy goods (.AXJO) It decreased by 0.7%.

S&P 500 futures were down 0.9% and Nasdaq futures were down 1%. Overnight, Wall Street ended lower as investors remained on guard over the Ukraine crisis, while higher commodity prices also weighed on market sentiment.

Investors sought safe haven in US Treasuries, sending benchmark 10-year yields down 14 basis points to 1.7%. Later, they’re back a little bit back to 1.78%.

Oil prices jumped on Friday after closing unchanged the day before, with the market also focused on whether OPEC+ producers, including Saudi Arabia and Russia, will increase production from January.

Brent crude futures for May rose to $114.23 a barrel, last rising 1.5% to $112.2. The contract was down 2.2% on Thursday.

There was no slowdown in other commodities either, with Chicago wheat futures jumping nearly 7%, taking weekly gains to more than 40% due to supply-side concerns.

On the economic data front, Friday’s US employment report is expected to show another month of strong job growth, with Omicron COVID-19’s shifting contagion wave waning significantly.

Said David Goodman, chief economist at Aware Super, one of Australia’s largest pension funds, which manages more than $150 billion.

Market volatility underscores the need for a diversified portfolio with exposure to different markets, Goodman said, adding that the fund’s portfolio includes companies in the renewable energy, digital infrastructure, housing and logistics sectors.

Gold prices also rose on Friday, targeting their best weekly gain since May 2021. Spot gold rose 0.2% to $1,939.5.

In the currency markets, the euro lost more ground and was ready for its worst week against the dollar in nine months. It fell 0.3% to $1.10320 and traded above the day’s lows. It lost about 1.8 percent this week, the worst week for the euro since June 2021.

Federal Reserve Chairman Jerome Powell on Thursday reiterated his comments from Wednesday that he would support an initial quarter-point increase in the bank’s benchmark interest rate.

(Anshuman Daga Reporting) Editing by Edwina Gibbs and Sam Holmes

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