Asian stocks bounced back on Friday after Wall Street rallied following Washington’s decision to not impose the stiffest of sanctions on Russia over its invasion of Ukraine.
Russian President Vladimir Putin’s decision to send troops into Ukraine sent shockwaves through Asian and European markets and pushed oil past $100 for the first time since 2014 as traders contemplated a major conflict in Eastern Europe.
Speculation had been growing for weeks about an incursion, which has stoked fears about supplies of key commodities including wheat, metals and crude.
Investors have also been fretting over the impact of any sanctions Western leaders would impose on Moscow. Despite a chorus of outrage at Putin’s move, the punishments have so far been seen as well short of the most stringent.
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While the latest measures from Washington target Russia’s two largest banks and see controls on high-tech items aimed at crippling its defence and aerospace sectors, US President Joe Biden has not cut off oil exports.
The news provided a big boost to Wall Street, where all three main indexes surged from deep in the red to end Thursday on a positive note, while crude eased back below $100.
The Nasdaq was the standout performer, ending more than 3% higher as commentators said the crisis could keep the Federal Reserve from embarking on an aggressive series of interest rate hikes to tame inflation.
Tech firms are more susceptible to higher borrowing costs and have been hammered in recent months on bets for tighter monetary policy.
The gains in New York filtered through to Asia, where Tokyo climbed 2% and Mumbai 2.4%, while Seoul, Jakarta, Bangkok and Wellington added more than 1%.
The benchmark Nikkei 225 climbed 1.95% or 505.68 points to 26,476.50, while the broader Topix index added 1.00%or 18.66 points to 1,876.24.
Safe Haven Gold Dips
There were also gains in Shanghai, Sydney, Singapore and Taipei, though Hong Kong struggled to hold early advances and saw fresh selling.
The Hang Seng Index fell 0.59%, or 134.38 points, to 22,767.18. The Shanghai Composite Index rose 0.63%, or 21.45 points to 3,451.41, while the Shenzhen Composite Index on China’s second exchange added 1.21%, or 27.62 points, to 2,310.07.
London, Paris and Frankfurt rallied at the open while safe haven gold dipped but held above $1,900.
Traders are keeping a close eye on developments in Ukraine as Russian troops close in on the capital Kyiv.
Oil rose again with Brent back above $100 a barrel as traders remained sensitive to headlines and analysts warned the conflict could keep prices elevated for months.
Iran Nuclear Talks Progress
Wheat, a major export from the region, was at its highest level since 2008 as analysts warned exports will likely dry up for the time being.
The caution came despite signs of progress on Iran nuclear talks that could see it begin exporting crude globally again, ramping up supplies at a time when demand is soaring as the world reopens.
While there is talk that the Ukraine crisis could lead the Fed to rethink its plans for tightening monetary policy, there were warnings bank boss Jerome Powell was not likely to be swayed by equity market losses.
Meanwhile, Federal Reserve Governor Christopher Waller said on Thursday the US economy was healthy enough to withstand a rise in rates to 1% by summer with a 50 basis point move next month – double the usual amount in a single hike.
However, he admitted the Ukraine crisis could force officials to rethink their plans.
Key figures around 0710 GMT
Tokyo > Nikkei 225: UP 2.0% at 26,476.50 (close)
Hong Kong > Hang Seng Index: DOWN 0.6% at 22,767.18 (close)
Shanghai > Composite: UP 0.6% at 3,451.41 (close)
London > FTSE 100: UP 1.0% at 7,280.95
Brent North Sea crude > UP 2.5% at $101.56 per barrel
West Texas Intermediate > UP 2.2% at $94.82 per barrel
New York > Dow: UP 0.3% at 33,223.83 (Thursday close)
- AFP with additional editing by Sean O’Meara
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