© Reuters. FILE PHOTO: A 3D-printed oil drum model is seen in front of the stock chart shown below in this illustration taken, December 1, 2021. REUTERS/Dado Ruvic/Illustration
Written by Stella Keough and Elon John
BEIJING (Reuters) – Asian stocks were volatile on Thursday and oil prices turned lower as recent developments in the Ukraine war and more hawkish comments from US Federal Reserve officials left investors nervous.
MSCI’s broadest index of Asia-Pacific shares outside Japan recouped some of its earlier losses to fall 0.34% on the day, with Chinese stocks leading declines.
Hong Kong fell 0.3% while the mainland blue chip index fell 0.6%.
However, it reversed losses to gain 0.25% and ended the session at a nine-week high, buoyed by pullbacks and buying through to the end of the Japanese fiscal year this month. [L2N2VR0D6]
“The market remains relatively volatile, (which indicates) that these tearing moves in stocks should be approached with caution,” said Kyle Rhoda, analyst at IG Markets.
European markets are poised for a stronger open, as evidenced by early futures trading. The region overall rose 0.29%, Germany rose 0.25%, and futures gained 0.2%.
E-mini futures rose 0.4%.
Leading to some volatility, federal policymakers signaled on Wednesday that they are ready to take more aggressive action to bring down runaway inflation, including the possibility of a half-percentage point rate hike at the next policy meeting in May.
This sent the three major US stock indexes down 1% overnight. [.N]
Analysts said in Barclays (LON 🙂 In a note on Thursday.
Geopolitics is also of great interest, and US President Joe Biden is scheduled to attend an emergency NATO summit later in the day. Biden will meet with G7 leaders and address European Union leaders, as markets await any escalation of sanctions against Russia.
Russian President Vladimir Putin said Wednesday that Moscow, which calls its actions in Ukraine a “special operation”, will seek to pay in rubles for gas sold to “unfriendly” countries, upsetting energy markets.
However, on Thursday, crude oil prices gave up earlier gains in choppy trading as investors weighed the possibility of fresh supply in tight markets amid prospects of a new Iran deal. [OR/]
European Union leaders are also expected at a two-day summit starting Thursday to agree on joint gas purchases, as they seek to reduce dependence on Russian fuel and build a buffer against supply shocks, but the bloc is unlikely to penalize Russian oil and gas.
Futures fell 58 cents, or 0.48%, at $121.02 a barrel, and US West Texas Intermediate futures were down 96 cents, or 0.84%, at $113.97 a barrel at 0502 GMT. Contracts are up $2 and $1, respectively, in early trade.
Meanwhile, the bond market paused on the benchmark index’s latest return of 2.3444% in Asian trading, after retreating from a nearly three-year peak of 2.4170% overnight.
The two-year yield, which is more sensitive to traders’ expectations of the federal funds rate, settled at 2.1366%, down from a three-year high of 2.2020% reached on Tuesday.
In the currency markets, the US dollar found some support as commodity currencies took a breather from a sharp rally driven by higher export prices, although the stable US bond market offered little solace to the faltering yen. [FRX/]
The yen hit a six-year low of 121.41 on Wednesday as rising US yields and deteriorating trade balance sucked cash from Japan.
Gold was slightly lower, trading at $1,942.9 an ounce. [GOL/]