Asian shares slide, oil rebounds on Russia sanctions

FILE PHOTO: Broker reacts while trading at his computer terminal at a stockbroking firm in Mumbai
FILE PHOTO: A broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai, India, February 1, 2020. REUTERS / Francis Mascarenhas

March 2, 2022

By Andrew Galbraith

SHANGHAI (Reuters) – Asian stocks came under fresh pressure on Wednesday and oil prices rose after worries grew about the impact of heavy-handed sanctions against Russia over its invasion of Ukraine dented stocks. in Europe and Wall Street.

As global sanctions against Moscow tighten, the United States is poised to ban Russian flights from using American airspace, following similar moves by the European Union and Canada.

US President Joe Biden is expected to announce the ban during his State of the Union address starting at 02:00 GMT on Tuesday, in which he also accused Russian President Vladimir Putin of misjudgement. West during the invasion of Ukraine.

Early in the Asian trading day, the MSCI index of Asia-Pacific shares, the broadest outside of Japan, was down 0.19% with China’s blue-chip CSI300 index down 0.89%.

Japan’s Nikkei drops 1.5%

In Australia, the benchmark ASX 200 index gained 0.2% as rising commodity prices lifted miners’ shares.

“The Russia-Ukraine conflict is likely to continue to dominate the markets for the foreseeable future. Yesterday’s announcement that Russia will not pay coupons to foreign holders of its government debt will spur investors further into safe havens,” the analysts said. of ING said in a note.

“The support to start the process of EU membership for Ukraine shows a united pro-Ukraine from Western Europe but is unlikely to help de-escalate tensions.”

On Tuesday, the S&P 500 and Nasdaq Composite closed about 1.6 percent lower, while the Dow Jones Industrial Average fell nearly 1.8 percent.

Global sanctions against Russia have prompted a series of large companies to announce they are shutting down or withdrawing from their business in the country.

On Tuesday, Exxon Mobil said it would withdraw from Russian operations, including oil-producing fields, following similar decisions by British oil and gas giants BP PLC and Shell, and Equinor ASA. of Norway.

Exxon’s announcement comes as oil prices continue to rise above $100 a barrel. On Wednesday morning, global benchmark Brent crude rose 2.6% to $107.69 a barrel and US West Texas Intermediate crude rose 3% o $106.50.

“We are starting to see what impact these sanctions might have on Russia’s oil exports and the challenges they face,” said Craig Erlam, senior market analyst at OANDA. set up and that drives the price higher.”

The increase comes despite a global deal to release 60 million barrels of crude oil reserves to try to curb price increases.

“We saw a very unexpected reaction when this happened in November and that was before Russia invaded Ukraine,” Erlam said.

In the currency markets, the last quoted dollar rose 2.83% against the ruble at 108.01 after hitting a record high of 117 a day earlier.

The dollar was also stronger against the yen, up 0.1% at 115.01, while the euro was steady at $1.1133. Against a basket of currencies of other major trading partners, the dollar was up at 97.339.

The greenback rallied as US Treasury yields rebounded after falling to an eight-week low on Tuesday. The changing global growth outlook as the deepening conflict has led investors to bet that the Federal Reserve will aggressively raise interest rates in the coming months.

The US 10-year benchmark yield rose to 1.7548% from 1.711% late Tuesday and the policy-sensitive 2-year yield rose to $1.3785 from 1.305%

Fed fund futures markets currently price a 5% chance of a 50 basis point increase at the Fed’s March meeting, although a smaller 25 basis point increase is seen as a virtual certainty.

Gold, which hit an 18-month high last week and gained nearly 2% on Tuesday as the Ukraine crisis worsened, fell 0.5% to 1,933.96.

Bitcoin, which gained nearly 15.5% on Tuesday on the back of a conflicting currency credentials boost, fell 1.2% to $43,911.84.

(Reporting by Andrew Galbraith; Editing by Sam Holmes) Asian shares slide, oil rebounds on Russia sanctions

Caroline Bleakley

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