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Monday, January 30, 2023

Asia Markets Rise After US Rebound Amid Russian Invasion of Ukraine

As states levied sanctions on Russia for its invasion of Ukraine, Asian equities mainly gained Friday as U.S. stocks rebounded toward the close of a turbulent trading day.

In afternoon trade, Japan’s Nikkei 225 index rose 1.9 percent to 26,450.84. The S&P/ASX 200 index in Australia regained some of its early gains to end the day 0.1 percent higher at 6,997.80. The Kospi index in South Korea increased by 1.2 percent to 2,679.56. The Hang Seng Index in Hong Kong fell 0.4 percent to 22,821.87, while the Shanghai Composite Index gained 0.7 percent to 3,452.84.

Additional penalties against Russia have been issued, including the freeze of assets of Russian companies, banks, and people, as well as the suspension of semiconductor and other sensitive products shipments to Russian military-linked entities.

To constrain Russia’s financial options, Tokyo stopped fresh issuances and distribution of Russian government bonds in Japan earlier this week. It also outlawed commerce with the two rebel areas of Ukraine.

While other Asian countries united to support Ukraine, China condemned Russian sanctions and accused the US and its allies for inciting Moscow.

Despite concerns about the Ukraine and inflation and the pandemic, Asian stocks looked to benefit from Wall Street’s recovery.

“The market shift occurred after the US announced punitive measures against Russia overnight, including export bans to cut Russia off from semiconductors and other innovative technologies, including software,” said Yeap Jun Rong, a market strategist at IG in Singapore.

Aside from the devastating human toll, the battle is expected to drive up costs at petrol stations and grocery shops throughout the world as oil, wheat, and maize prices rise. Russia and Ukraine are important energy, food, and other commodity producers.

Asian economies, which are already dealing with the effects of the coronavirus outbreak, are especially sensitive to increased energy costs. Japan imports practically all of its energy, with the exception of a small amount from Russia.

On both sides of the Atlantic, oil prices momentarily surpassed $100 per barrel on Thursday, reaching their highest levels since 2014. However, after Biden stated that the sanctions plan is “particularly designed to allow energy payments to continue,” they gave back some of their gains. Biden also stated that he intended to alleviate Americans’ economic hardships.

In electronic trading on the New York Mercantile Exchange on Friday, benchmark US crude rose $1.30 to $94.11 a barrel. Brent crude, the worldwide benchmark for oil prices, rose $1.58 to $97.00 per barrel.

Because Europe’s economy is more tightly linked to Russia and Ukraine, prices have risen faster than in the United States. Natural gas spot prices in Europe have increased by more than 50%.

Higher oil and food costs are escalating concerns about inflation, which peaked in January at its highest level in many generations in the United States, and what the Federal Reserve will do to control it.

On Wall Street, the S&P 500 gained 1.5 percent to 4,288.70 after recovering from an early 2.6 percent drop, while the Nasdaq gained 3.3 percent to 13,473.59.

The Dow Jones Industrial Average, which is unaffected by large tech firms, climbed 0.3 percent to 33,223.83.

The Federal Reserve of the United States is expected to raise interest rates for the first time since 2018 beginning next month. In times of geopolitical uncertainty, such as the Kosovo conflict and the US invasion of Iraq, it has occasionally delayed major policy decisions.

However, many believe the Fed will continue to gradually raise rates at its next sessions in order to keep inflation under control without plunging the economy into recession.

Bond rates first fell as money poured into products that appeared to provide steadier returns than stocks, causing huge fluctuations in the market. However, rates rebounded during the day, and the 10-year Treasury yield was 1.96 percent on Friday, down from 1.97 percent on Wednesday.

The US dollar fell to 115.21 Japanese yen from 115.48 yen in currency trade. The euro now costs $1.1219, compared to $1.1204.

Cedric Blackwater
Cedric Blackwater
Cedric is a journalist with over a decade of experience reporting on local US news, and touching on many global topics. He is currently the lead writer for Bulletin News.

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