©Reuters. FILE PHOTO: A 3D printed model of oil barrels is seen in front of a falling stock chart in this illustration taken December 1, 2021. REUTERS/Dado Ruvic/Illustration
By Stella Qiu and Alun John
BEIJING (Reuters) – Asian stocks fell on Thursday and oil prices slipped as the latest developments in the Ukraine war and more aggressive comments from U.S. Federal Reserve officials unsettled investors.
MSCI’s broader index of Asia-Pacific stocks outside of Japan recovered some of its earlier losses to drop 0.34% on the day, with Chinese shares leading the declines.
Hong Kong’s fell 0.3%, while mainland China’s blue chip index slipped 0.6%.
however, it reversed losses to gain 0.25% and end the session at a nine-week high, buoyed by a pull-and-buy at the end of Japan’s fiscal year this month. [L2N2VR0D6]
“It’s still a relatively volatile market, (which) suggests these gut-wrenching moves in equities should be treated with caution,” said Kyle Rodda, an analyst at IG Markets.
European markets are poised for a stronger open, as early futures trading indicates. The pan-region was up 0.29%, Germany was up 0.25% and futures were up 0.2%.
E-mini futures for the rose 0.4%.
Fueling some of the volatility, Fed policymakers signaled on Wednesday that they were ready to take more aggressive action to curb runaway inflation, including a possible half-percentage-point rate hike at the next meeting. May monetary policy.
This sent all three major US equity benchmarks down 1% overnight. [.N]
“We expect a limited rally in US equities. The Fed is clearly prioritizing fighting inflation and, while not our base case, stagflation risks have increased,” said analysts at barclays (LON:) in a note Thursday.
Geopolitics is also a priority, and US President Joe Biden will attend an emergency NATO summit later in the day. Biden will meet with G7 leaders and address European Union leaders, with markets keeping an eye on any escalation of sanctions on Russia.
Russian President Vladimir Putin said on Wednesday that Moscow, which calls its actions in Ukraine a “special operation,” will seek payment in rubles for gas sold to “enemy” countries, rattling energy markets.
However, crude oil prices on Thursday gave back earlier gains in volatile trading as investors assessed the potential for fresh supply in tight markets amid prospects for a new deal with Iran. [OR/]
EU leaders are also expected to agree at a two-day summit starting Thursday to jointly buy gas as they seek to reduce reliance on Russian fuels and build a buffer against supply shocks, but it is little. The bloc is likely to sanction Russian oil and gas.
futures were down 58 cents, or 0.48%, at $121.02 a barrel and U.S. West Texas Intermediate futures were down 96 cents, or 0.84%, at $113.97 a barrel. at 0502 GMT. The contracts rose $2 and $1, respectively, in early trading.
Meanwhile, the bond market paused for breath with the benchmark index yielding 2.3444% in Asian trading, after retreating from a nearly three-year high of 2.4170% overnight.
The two-year yield, which is more sensitive to traders’ expectations of the fed funds rate, came in at 2.1366%, down from a nearly three-year high of 2.2020% hit on Tuesday.
In currency markets, the US dollar found some support as commodity currencies took a breather from a strong rally fueled by rising export prices, although the steadier US bond market offered little consolation. to the struggling yen. [FRX/]
The yen hit a six-year low of 121.41 on Wednesday as rising US yields and a deteriorating trade balance sucked cash out of Japan.
Gold fell slightly, trading at $1,942.9 an ounce. [GOL/]