Asia’s major market enjoyed a broadly positive Thursday as investors reacted to a more conciliatory tone from Moscow over the Russia-Ukraine stand-off, while minutes from the Federal Reserve’s January meeting eased concerns it was set to hike rates sharply soon.
Meanwhile, oil prices slipped on further signs of a breakthrough in Iran nuclear talks.
Global equities were sent plunging and crude surged after a top US official said Russia could invade Ukraine imminently, but Moscow appeared to soothe those fears on Tuesday by saying it had started withdrawing some troops.
However, while the general mood on trading floors was optimistic that tensions had eased, Washington has dismissed the Russian claims and accused it of sending more soldiers to the border, adding there were “indications they could launch a false pretext at any moment to justify an invasion.”
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That came after NATO joined Ukraine in saying there was no sign of any retreat, while chief Jens Stoltenberg said tensions in the east with Russia were “the new normal in Europe.”
Asia enjoyed a mostly upbeat day and Hong Kong, Shanghai, Sydney, Seoul, Taipei, Wellington, Bangkok, Singapore were in positive territory, though there were losses in Tokyo, Mumbai, Jakarta and Manila.
The Hang Seng Index added 0.30%, or 73.87 points, to 24,792.77. The Shanghai Composite Index added 0.06%, or 2.20 points, to 3,468.04, while the Shenzhen Composite Index on China’s second exchange gained 0.23%, or 5.17 points, to 2,302.16.
The benchmark Nikkei 225 index dropped 0.83% or 227.53 points to close at 27,232.87, while the broader Topix index lost 0.79% or 15.39 points to 1,931.24.
London dipped at the open though Paris and Frankfurt edged up.
Eyes On Fed Inflation Plan
The geopolitical uncertainty jolted US markets on Wednesday, though they enjoyed a late rally from intraday lows after the Fed minutes provided no surprises.
The release had been keenly awaited as the bank tries to walk a fine line of reining in four-decade-high inflation while not knocking the healthy economic recovery off track.
Expectations are for officials to hike interest rates in March and then several times again before the end of the year, but there has been much debate about how big its initial move will be and how many more there will be.
It has also said it will start to offload the bonds it has on its balance sheet, which are helping to keep borrowing costs down.
Some have warned of a 50-basis-point hike at first – twice what it usually announces – and as many as six or seven more before January next year.
Iran Talks Calm Oil Markets
“The Fed’s Minutes showed interest rate hikes are coming and that they are readying for a significant reduction in the size of the balance sheet,” OANDA’s Edward Moya said.
“Investors that were worried that the Fed would be pressured to begin the balance sheet runoff fairly soon could breathe a sigh of relief.
National Australia Bank’s Ray Attrill added the minutes did not “appear to give obvious succour to the idea of the Fed kicking off the tightening cycle with a 50-point move.”
On oil markets both main contracts eased, though they pared earlier steep losses, on growing hopes that talks on the Iran nuclear deal could soon bear fruit.
“Positive developments in the US-Iran nuclear negotiations are helping to calm oil prices,” Claudio Galimberti of Rystad Energy said.
The developments offset uncertainty over the Russia-Ukraine crisis, which had helped propel prices towards $100 for the first time in more than seven years, and comes as demand continues to improve as the world economy reopens. Data showed US stockpiles at their lowest since 2018.
Key figures around 0820 GMT
Tokyo > Nikkei 225: DOWN 0.8% at 27,232.87 (close)
Hong Kong > Hang Seng Index: UP 0.3% at 24,792.77 (close)
Shanghai > Composite: UP 0.1% at 3,468.04 (close)
London > FTSE 100: DOWN 0.1% at 7,598.73
New York > Dow: DOWN 0.2% at 34,934.27 (Wednesday close)
- AFP with additional editing by Sean O’Meara
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