- Nikkei up 3.8%, best in nearly 21 months
- Oil prices up, euro holds on to gains
- The ECB is meeting today; US CPI due today
- Senior Russian and Ukrainian officials in talks in Turkey
BEIJING, March 10 (Reuters) – Asian stocks jumped on Thursday, trailing Wall Street gains as planned diplomatic talks between Russia and Ukraine boosted risk sentiment, although analysts warned the rally could be likely to reverse abruptly.
Oil prices also recovered, after falling more than 12% from the previous session, with the market wondering if major producers would increase supply to help fill Russia’s production gap due to sanctions for its invasion of Ukraine.
MSCI’s broadest Asia-Pacific ex-Japan equity index (.MIAPJ0000PUS) gained 1.6%, moving away from the lowest level since November 2020. The Japanese Nikkei (.N225) rose 3.8 %, the highest in almost 21 months.
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Chinese blue chips (.CSI300) rose 1.75% while Hong Kong’s Hang Seng Index (.HSI) rose 0.6%.
In Europe, equity futures point to a stronger open. The Euro Stoxx 50 rose 0.35%, although German DAX futures rose 0.55% and FTSE futures gained 0.48% in early trades.
Wall Street futures were slightly lower. S&P 500 futures fell 0.13% and Nasdaq futures fell 0.21%.
Traders and investors are now awaiting a meeting of the European Central Bank later today for any sign of how Russia’s invasion of Ukraine will affect monetary policy in the region. US inflation figures are also due, which could further guide expectations for the Federal Reserve meeting next week.
Mansoor Mohi-uddin, chief economist at the Bank of Singapore, said financial markets rallied in hopes that Ukraine and Russia could begin to negotiate their differences more seriously.
“The reaction, however, is unlikely to prove sustainable as the two countries still have major differences and the military conflict is expected to escalate, with Russia aiming to capture key cities from Ukraine.”
Russian Foreign Minister Sergei Lavrov arrived in Turkey on Thursday ahead of scheduled talks with his Ukrainian counterpart Dmytro Kuleba in what will be the first meeting between the two since Russia invaded Ukraine two weeks ago. Read more
Adding to the uncertainties, Russia on Wednesday accused the United States of declaring economic war on the country and warned Washington that it was considering its response to a ban on Russian oil and energy. Read more
European Union leaders will gradually stop buying Russian oil, gas and coal, a draft statement said on Thursday, as the bloc seeks to reduce its dependence on Russian energy sources, following a ban from the United States. Read more
Brent crude futures rose 3% on Thursday to $114.64 a barrel, and U.S. crude rose 1.73% to $110.58 a barrel, after comments from the Minister of Energy of the United Arab Emirates, Suhail al-Mazrouei, according to which his country is committed to respecting the existing agreement between the OPEC countries to increase the supply of oil.
Earlier, prices fell after the UAE’s ambassador to Washington said the country would encourage OPEC to consider higher production to fill the supply gap due to sanctions against Russia.
Rising energy prices will bolster expectations that the US Federal Reserve will raise interest rates by 25 basis points at its policy meeting next week, with data due later today expected to show that the US consumer inflation will hit an annualized clip of 7.9% in February.
“US stocks could be in a holding pattern with higher levels of volatility as investors assess the impact of the Ukraine conflict on inflation and possible Fed actions,” said David Chao, strategist for global markets based in Hong Kong at Invesco.
US stocks surged overnight, led by financials and technology stocks. The Nasdaq Composite (.IXIC) gained 3.59% while the Dow Jones Industrial Average (.DJI) rose 2%.
Amazon.com Inc said Wednesday its board had approved a 20-for-1 split of the e-commerce giant’s common stock and authorized a $10 billion buyout plan, pushing the company’s stock up 7 % in extended exchanges. Read more
In the currency markets, the euro was trading at $1.1054 after jumping 1.6% on Wednesday, its best day since June 2016, accompanied by gains in European stocks and a sale of bonds, while the safe-haven yen slipped to a one-month low. of 116 per dollar.
The dollar index was at 98.144, having fallen 1.2% overnight amid the surge in the euro, and hurt, along with the yen, by rising sentiment towards riskier assets like stocks. shares.
Gold was slightly lower, with spot gold falling 0.6% to $1,977.89 an ounce.
The yield on the benchmark 10-year Treasury note fell slightly to 1.9409% from its US close of 1.948% on Wednesday.
The two-year yield, which rises on traders’ expectations of a hike in the fed funds rate, touched 1.6638% from a US close of 1.678%.
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Reporting by Stella Qiu in Beijing and Alun John in Hong Kong; Editing by Sam Holmes and Raju Gopalakrishnan
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