Asian stocks rise amid Russia-Ukraine talks and oil concerns

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TOKYO (AP) – Asian stocks were mostly higher on Tuesday as global investors eyed talks to end Russia’s military attack on Ukraine, which have so far only resulted in an agreement to keep talking.

Benchmarks were higher in Tokyo, Sydney and Shanghai in early trade. Hong Kong declined and markets in South Korea were closed for a public holiday. US futures fell and oil prices rose.

Rising oil prices and increasing financial pressure from the US and its allies on Russia, one of the world’s largest energy exporters, over its invasion of Ukraine are increasing uncertainty about the global economic outlook.

Russian forces shelled Ukraine’s second-largest city on Monday, rocking a residential area and approaching the capital Kyiv in a 40-mile convoy of hundreds of tanks and other vehicles.

“The final is still elusive. While the ceasefire talks on the Belarusian-Ukrainian border have ended, the military fires are certainly far from over while sanctions have continued to be tightened,” said Tan Boon Heng of Singapore’s Mizuho Bank in a comment.

Japan’s benchmark Nikkei 225 was up 1.4% to 26,893.98 in afternoon trade. Australia’s S&P/ASX 200 rose 0.7% to 7,096.50. Hong Kong’s Hang Seng slipped 0.4% to 22,628.17, while the Shanghai Composite was up 0.2% to 3,469.90. Trade in South Korea was closed for a national holiday.

“Asian stocks were higher on Tuesday, reflecting a modest recovery on Wall Street and following Russia-Ukraine talks. The market‘s focus will remain on geopolitical tensions, at least in the near term,” ActivTrades’ Anderson Alves said in a report.

The value of the Russian ruble fell to a record low after Western countries moved to ban some Russian banks from a major global payments system. On Monday, the US Treasury announced further sanctions against Russia’s central bank.

Governors and legislators in numerous US states, trying to increase financial pressure on Russia, took steps to divert state pension and treasury money from investments in Russian companies or Russian companies that supported the war.

Early Tuesday, the ruble fell 3.2% against the dollar to 104.51. The Moscow Stock Exchange was closed.

Ordinary Russians are likely to face higher prices and restricted foreign travel due to Western sanctions imposed on banks and ATMs on Monday. Greater economic turmoil could loom if price shocks and supply chain problems cause Russian factories to close due to lower demand.

On Wall Street, the S&P 500 fell as much as 1.6% Monday and then recouped much of that to close 0.2% lower at 4,373.94. The Dow Jones Industrial Average fell 0.5% to 33,892.60 and the Nasdaq Composite rose 0.4% to 13,751.40, recovering from a 1.1% decline.

The Russell 2000 index of small business stocks was up 0.4% to 2,048.09.

The Biden administration said Germany, France, Britain, Italy, Japan, the European Union and others will join the US to meet Russia’s central bank.

Markets were already jittery before Russia’s invasion, concerned about impending Federal Reserve rate hikes that would be the first since 2018.

The war in Ukraine is raising expectations that the US Federal Reserve may need to take a softer approach to raising interest rates to fight inflation.

Investors have turned to US Treasuries in search of safer yields. The yield on the 10-year Treasury fell 0.15 percentage points to 1.83%, the biggest drop since the Omicron coronavirus variant first unsettled investors. Gold rose 0.7%.

Fed Chair Jerome Powell is due to testify before Congress later this week and could offer clues on the way forward. A report on Friday will also show whether US jobs market strength continued in February, giving the Fed more room to hike rates.

The Fed is walking a tightrope and must raise rates enough to curb inflation, but not so much as to plunge the economy into recession. Higher interest rates are also putting downward pressure on various investments from stocks to cryptocurrencies.

In energy trading, benchmark US crude rose 91 cents to $96.63 a barrel in electronic trading on the New York Mercantile Exchange. On Monday, it rose $4.13 to $95.72.

Brent crude, the international standard, rose $1.02 to $98.99 a barrel. Oil prices on both sides of the Atlantic have skyrocketed amid concerns about what will happen to crude stocks.

In forex trading, the US dollar rose to 115.07 Japanese yen from 114.99 yen. The euro cost $1.1203 compared to $1.1219.

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