Asian stocks fall, oil prices rise on Ukraine invasion fears
BEIJING: Asian stock markets fell Monday and oil prices rose amid concern about a possible Russian invasion of Ukraine.
Tokyo's benchmark index fell by an unusually wide daily margin of 2.1per cent. Shanghai, Hong Kong and Seoul also retreated. Global crude prices added more than $1 per barrel in a sign of concern about possible supply disruptions.
On Wall Street, the benchmark S&P 500 index tumbled 1.9 per cent on Friday after the White House encouraged Americans to leave Ukraine within 48 hours. Other governments including Russia were pulling diplomats and their citizens out of the country.
Russia is one of the biggest oil producers. Any military action that disrupts supplies could send shockwaves through energy markets and global industry.
“Markets are belatedly waking up to the geopolitical risks posed by Russian military action against Ukraine,” Rabobank said in a report.
The Nikkei 225 in Tokyo was down 2.1 per cent to 27,117.18 at midday after being off 2.6 per cent earlier.
The Bank of Japan made an offer for unlimited government bond purchases on Monday, moving to curb a surge in long-term interest rates. Japan’s central bank set the interest rate for purchasing 10-year government bonds at 0.25 per cent. The offer drew no bids but still had the effect of lowering interest rates and likely reassured investors of continued support for the markets.
The rate had risen on speculation the BOJ might begin reeling back its ultra-loose monetary policy in line with other central banks like the Federal Reserve. The latest decision highlights the BOJ’s intention to keep interest rates super-low since inflation remains well below its target rate of 2 per cent. Japan’s benchmark interest rate has been kept at minus 0.1 per cent for years.
The Hang Seng in Hong Kong lost 1.2 per cent to 24,594.21. The Kospi in Seoul retreated 1.2 per cent to 2,714.33.
The Shanghai Composite Index shed 0.6 per cent to 3,441.23 while Sydney's S&P-ASX 200 gained 0.2 per cent to 7,234.20.
India's Sensex opened down 1.7 per cent at 57,153.59. New Zealand, Bangkok and Jakarta declined while Singapore was unchanged.
Investors already were on edge about Federal Reserve plans to wind down economic stimulus to cool inflation that is at a four-decade high and about how quickly Europe and other central banks would follow.
On Friday, the S&P 500 declined to 4,418.64 for its fourth weekly loss in the past six weeks after President Joe Biden's national security adviser, Jake Sullivan, said the threat of a Russian attack is “immediately enough” that Americans should leave Ukraine.
The Dow Jones Industrial Average lost 1.4 per cent to 34,738.06. The Nasdaq composite dropped 2.8% to 13,791.15.
Investors moved money into Treasury bonds, gold and other assets seen as safe-havens.
The market price of a 10-year Treasury rose, pushing down its yield, or the difference between the day's price and the payout if held to maturity, to 1.91 per cent from Thursday's 2.03 per cent.
Treasury prices had been falling on expectations the Fed will raise interest rates as many as seven times this year. If the Fed succeeds in cooling inflation, that would increase the buying power of the payout from bonds, making them a more attractive investment.
In energy markets, benchmark U.S. crude rose $1.31 to $94.41 per barrel in electronic trading on the New York Mercantile Exchange. The contract added $3.22 on Friday to $93.10. Brent crude, the price basis for international oils, advanced $1.$1.04 to $95.48 per barrel in London. It gained $3.03 the previous session to $94.44.
The dollar gained to 115.48 yen from Friday's 115.27 yen. The euro advanced to $1.1346 from $1.1334.