Asian stocks fall, oil falls as US weighs release of reserves

FILE PHOTO: Models of oil drums and a pump jack are displayed in front of a rising stock chart and
FILE PHOTO: Mockups of oil drums and a pump jack are displayed in front of a rising stock chart and “$100” in this February 24, 2022 illustration. REUTERS/Dado Ruvic/Illustration

March 31, 2022

By Kanupriya Kapoor

(Reuters) – Asian stocks fell on Thursday after this week’s global rally after Wall Street’s overnight stumble, while oil prices fell sharply as the United States weighed a massive withdrawal from its reserves to stem soaring fuel prices.

Brent crude futures fell 4.4% to $108.50 a barrel and US crude futures were down more than 5% to $101.76 a barrel in morning trade.

The United States is considering releasing up to 180 million barrels of oil from strategic reserves over several months, four US sources have said, while the White House seeks to slash fuel prices, which have risen since Russia invaded Ukraine late last month .

A rally in equities, meanwhile, lost momentum as hopes of a quick peace began to fade and optimism turned to worries of impending rate hikes.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan fell 0.2%, led by a 0.7% decline for Hong Kong-based Hang Seng. Japan’s Nikkei fell 0.2%. Australia’s resource-intensive index rose 0.4%.

Overnight, the Dow Industrial Average, S&P 500 and Nasdaq Composite fell after similar falls in European stocks.

“In the US markets we track, the sell-offs reflect an ongoing assessment of the threat of inflation and what the Fed will do about it,” said Rob Carnell, chief economist at ING Singapore.

“At the same time, markets have reacted cautiously positively to events in Ukraine over the last 24 hours, with Russia moving back away from Kyiv, but things still look quite uncertain.”

Bond markets smoldered after a sharp sell-off.

Two-year government bond yields, which follow policy expectations, last stood at 2.2922% and are up more than 150 basis points for the quarter – the steepest rise of its kind since 1984 on expectations of rapid rate hikes.

The yield on the 10-year government bond, which is more sensitive to the outlook for long-term growth, was last seen at 2.3378%, after hitting 2.56% on Monday, the highest since May 2019.

Inflation continues to weigh on governments and central banks around the world. Germany posted a whopping 7.6% inflation rate on Wednesday, sending its two-year bond yield into positive territory for the first time since 2014.

Spot gold was down slightly, down 0.11% to $1,930.74 an ounce. [GOL/]

(Edit by Himani Sarkar) Asian stocks fall, oil falls as US weighs release of reserves


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