August 16, 2022

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Asian stocks rebounded but markets eye long-term risks between Russia and Ukraine

Asian stocks rebounded but markets eye long-term risks between Russia and Ukraine

A woman wearing a face mask passes through a screen displaying the Hang Seng pointer, in Hong Kong, China, February 24, 2022. REUTERS/Tyrone Siu

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  • Asian stocks rose on Wall Street
  • Russia advances to Ukraine
  • Analysts warn the rally could be short
  • Western countries impose sanctions on Russian banks and state-owned companies

SINGAPORE (Reuters) – Asian markets rebounded on Friday after a surprising reversal on Wall Street overnight, as investors weighed the long-term impact of tough Western sanctions against Russia next.

Troops, tanks and missiles were fired at Ukraine.

European stock markets seemed poised to follow Asia higher even as Russia pressured its attacks and global condemnation mounts, with FTSE futures adding 0.78%, European futures up 2.2% and German DAX futures adding 1.56%.

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But US stock futures fell in Asian trade, with S&P500 e-mini futures losing 0.61% and Nasdaq futures dropping 0.92%.

Some analysts said that the sanctions imposed by the United States, Europe and a number of other countries are not as strong as the markets had feared.

While Western countries have redoubled their efforts to undermine Russia’s ability to do business — freezing bank assets and cutting state-owned companies — they have stopped short of separating Russia from the SWIFT international banking system or targeting its oil and gas exports, some analysts said. He said it has helped the markets recover. Read more

“The limits of the economic pain the ‘West’ was willing to endure to support Ukraine and punish Russia were revealed within 24 hours of the start of the Russian offensive,” Jeffrey Haley, chief market analyst at OANDA, said in a note.

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“The Russian attack took place at a time of already high inflation and a global commodity shortage, and the West immediately backed down. The process of throwing Ukraine under the geopolitical bus has begun. It is clear that the markets have felt the same way, that this is the worst of it. To get… then, the power of buying and dipping proved irresistible.”

MSCI’s broadest index of Asia Pacific shares outside Japan (.MIAPJ0000PUS.) It was up 0.57% by midday, the Shanghai Composite Index (.SSEC) It rose 0.57% and Japan’s Nikkei index (.N225) It was up 1.27%. South Korea’s benchmark Kospi added 1.01%, recovering from Thursday’s decline.

Hong Kong’s Hang Seng and Australian shares are down slightly, 0.44% and 0.03% respectively, after a solid start.

Investors rediscovered their appetite for risk overnight after some sharp initial losses, with major US indexes posting gains led by technology stocks.

But some analysts fear any rallies are fleeting.

“Biden’s sanctions and reluctance to send in troops provide some comfort. But this conflict will be a protracted issue and it will add to global inflationary pressures that will keep central banks on the right path of tightening,” said Kyle Rhoda, an analyst at IG Markets in Indiana. Melbourne.

“Everything is fine at the moment but the market in the long-term will follow the downtrend,” he said.

Oil prices rose again on concerns about supply disruptions, with Brent crude up 2% to $101.80 a barrel, while US West Texas Intermediate (WTI) also rose 2.71% to $95.53, although both benchmarks were up. far from their highest level.

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Safe haven gold rose 0.57% to $1,913 an ounce after retreating from multi-month highs of $1,973.96 hit on Thursday.

The yield on the 10-year US Treasury was at 1.95% after an initial drop to 1.84% on Thursday, the biggest daily drop since late November.

The US dollar index, which measures the US currency against a basket of major currencies, fell 0.23% to 96.87, after rising on Thursday to levels last seen during the first wave of the coronavirus pandemic. The Russian ruble rose again and reached 85.52 against the dollar, retreating from a record low of 89.986.

Ukrainian President Volodymyr Zelensky said late Thursday that a new iron curtain is descending over Europe.

Ukrainian soldiers clashed with Russian forces as they poured in from three sides while about 100,000 people fled their homes, according to the United Nations, many of whom were holed up in basements and subway stations to escape the bombing. Ukrainian authorities said 137 people were killed on the first day of fighting. Read more

On Thursday, the Dow Jones Industrial Average (.DJI) It closed up 92.07 points, or 0.28%, at 3,3223.83, while the Standard & Poor’s 500 (.SPX) It rose 63.2 points, or 1.50%, to 4,288.7 points, and the Nasdaq Composite Index (nineteenth) It added 436.10 points, or 3.34%, to 13,473.59 points.

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(Kanubria Kapoor Report) Editing by Richard Boleyn and Kim Coogill

Our criteria: Thomson Reuters Trust Principles.