Broker reacts while trading at its computer terminal at a brokerage firm in Mumbai, India, February 1, 2020. REUTERS / Francis Mascarenhas
SHANGHAI, March 2 – Asian stocks came under renewed pressure on Wednesday as oil prices jumped above $ 110 a barrel as investors worried about the impact of aggressive sanctions against Russia on invading Ukraine.
European stock markets were set to open weakly after Tuesday’s crash, with Euro Stoxx 50 futures down 0.13% and German DAX futures down 0.17% in early deals. FTSE futures rose 0.34%.
In the latest tightening of restrictions on Moscow, the United States has banned Russian flights using US airspace following similar actions by the European Union and Canada.
US President Joe Biden announced the ban during a speech on the state of the union on Tuesday, in which he also said that Russian President Vladimir Putin would “pay a long price” for the invasion of Ukraine. Read more
MSCI’s broadest Asia-Pacific stock index outside Japan (.MIAPJ0000PUS) fell 0.56% and China’s blue chip index CSI300 (.CSI300) fell 1.12%.
Japan’s Nikkei (.N225) fell 1.68%.
In Australia, the base index ASX 200 (.AXJO) rose 0.28% despite the risk-averse risk aversion elsewhere as rising commodity prices boosted miners’ shares.
“The Russia-Ukraine conflict is likely to continue to dominate markets for the foreseeable future. Yesterday’s announcement that Russia will not pay coupons to foreign holders on its sovereign debt should push investors further to asylum,” ING analysts said in a note. .
“Support for the start of the EU membership process for Ukraine shows the unity of support for Ukraine from Western Europe, but is unlikely to help ease tensions.”
On Tuesday, the S&P 500 (.SPX) and Nasdaq Composite (.IXIC) closed about 1.6% lower, while the Dow Jones Industrial Average (.DJI) fell nearly 1.8%.
Global sanctions against Russia have prompted a number of large companies to announce the suspension or exit of their business in the country.
Exxon Mobil (XOM.N) said on Tuesday it would leave operations in Russia, including oil fields, following similar decisions by British oil giants BP PLC and Shell and Norway’s Equinor ASA. (EQNR.OL) read more
Exxon’s announcement comes as the price of oil continues to rise. On Wednesday, global oil Brent exceeded $ 110 a barrel, rising more than 5.8% to $ 111.09, the highest level since early July 2014.
US crude oil West Texas Intermediate jumped nearly 6% to $ 109.30, the highest level since September 2013.
The rise came despite a global agreement to release 60 million barrels of crude reserves to try to contain rising prices and rising inflationary pressures.
“We believe there is still room for oil prices to continue to rise,” said Carlos Casanova, senior economist for Asia at UBP in Hong Kong. “So much depends on political factors and ensuring that some of the supplies coming from Russia are offset by (not only) more oil than American shale, but also from Iran.”
In the foreign exchange market, the dollar rose 1.88% against the ruble to 107.01 after reaching a record high of 117 days earlier.
The dollar was also stronger against the yen, rising 0.12% to 115.03, while the euro fell to $ 1.1112. Against a basket of currencies of other major trading partners, the dollar strengthened 0.15% to 97,464.
The rise in greenbacks came as US government bond yields recovered after falling to an eight-week low on Tuesday. The changing outlook for global growth has prompted investors to cut bets that the Federal Reserve will aggressively raise interest rates in the coming months.
The 10-year reference yield in the United States rose to 1.7309% from 1.711% late on Tuesday, and the politically sensitive 2-year yield rose to 1.3205% from 1.305%.
Fed funds futures markets now value only a 5% chance of an increase of 50 basis points at the Fed meeting in March, although a smaller increase of 25 basis points is seen as virtual security. FEDWATCH
In a speech Tuesday, Biden called on companies to produce more cars and semiconductors in the United States so that Americans can rely less on imports as a way to fight inflation.
Gold, which peaked at an 18-month high last week and rose nearly 2 percent on Tuesday amid a worsening crisis in Ukraine, returned 0.57 percent to $ 1,932.11 an ounce as the dollar strengthened.
Bitcoin, which rose nearly 15.5 percent on Tuesday due to the strengthening of identity data for a conflicting currency, read more, was 0.23% lower at $ 44,341.68.
Report by Andrew Galbraith; Edited by Sam Holmes
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