Asian Shares Reach 5-Week Highs But War, Fed Fears Persist

Asia’s markets capped a month-long recovery but trade was low-key as worries over Fed policy tightening and the conflict in Ukraine cast a shadow

 

Asian stocks hit their highest mark in more than a month on Tuesday, boosted by a broad recovery on Wall Street.

MSCI’s broadest index of Asia-Pacific shares outside Japan built on early gains and advanced 0.3% to 602.2, the strongest since February 24.

The benchmark has lost 4% so far this year, dragged down by big declines in Chinese shares, while the Russia-Ukraine crisis has also hurt the near-term outlook.

“Geopolitical shocks historically did not tend to dominate the markets for long,” global markets strategists at JPMorgan said in a note. “The start of Fed tightening should not be seen as a negative for stocks, at least not in the early stages.”

 

Also on AF: Shanghai Lockdown Extended After Surge in Covid Infections

 

Tokyo’s blue chip shares ended higher on Tuesday, driven by buying of high-tech shares, though the yen’s gyrations weighed on the market.

The benchmark Nikkei 225 index added 0.19%, or 51.51 points, to 27,787.98, after spending the day in a narrow band. The broader Topix index fell 0.23%, or 4.51 points, to 1,949.12.

Fast Retailing rose 2.06%, providing the biggest boost for the Nikkei, followed by technology investor SoftBank Group, rising 2.61% and chip making equipment maker Tokyo Electron climbing 0.88%.

Markets in mainland China and Hong Kong were closed for a public holiday on Tuesday. Shanghai went into a two-stage lockdown last week as authorities worked to contain the city’s biggest ever Covid-19 outbreak.

Indian stocks fell with Mumbai’s signature Nifty 50 index down 0.53% at the close, or 96.00 points, at 17,957.40, while South Korean stocks added 0.1%.

But trade was low-key across Asia with Sydney, Singapore, Jakarta, Bangkok and Wellington slightly up, though Manila dropped.

London, Paris and Frankfurt all opened on the front foot.

 

Volatile Quarter for Global Stocks

S&P 500 stock futures shed 0.08% and Nasdaq futures slipped 0.05% after Wall Street rose on Monday, supported by tech shares.

Global stocks have had a volatile quarter as the Russia-Ukraine crisis and worries over higher commodity prices fuel inflation concerns and cloud the direction of interest rates.

“Profit reporting season in the US kicks off next week and it will be interesting to see how firms are interpreting the tea leaves, and whether earnings guidance is revised down,” Tapas Strickland, director of economics and markets at NAB, said in a note.

In the currency markets, the Australian dollar jumped to a nine-month high after the central bank signalled higher interest rates were closer. The Aussie strengthened 0.9% to $0.7612, its strongest since late June.

Global markets were looking to Wednesday’s release of minutes from the Federal Reserve’s last policy meeting that could offer signs on whether the US central bank could raise its benchmark overnight interest rate by half a percentage point next month.

Oil futures rose as the potential for more sanctions added to concerns about supply disruptions, while Iran nuclear talks stalled.

Brent crude futures gained 1.1% to $108.7 a barrel, while US West Texas Intermediate futures also rose.

Gold prices ticked down, with spot gold easing 0.2% to $1,928.7 per ounce.

 

Key figures around 0720 GMT

Tokyo – Nikkei 225 > UP 0.2% at 27,787.98 (close)

Hong Kong – Hang Seng Index > Closed for a holiday

Shanghai – Composite > Closed for a holiday

London – FTSE 100 > UP 0.1% at 7,567.98

Brent North Sea crude > UP 1.6% at $109.20 per barrel

West Texas Intermediate > UP 1.6%  at $104.93 per barrel

New York – Dow > UP 0.3% at 34,921.88 (Monday close)

 

  • Reuters with additional editing by Sean O’Meara

 

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Sean OMeara

Sean O’Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.