Markets fluctuated in Asia on Friday as traders struggled to build on a rally in New York, with focus on the impact of the Ukraine war, surging inflation and Federal Reserve plans to fight it.
The crisis in eastern Europe has forced investors to reassess their outlook for the global economy owing to an expected surge in already soaring prices, which some commentators now warn could lead to recessions and stagflation.
Another rally on tech firms helped Wall Street clock up more healthy gains as data showed filings for US unemployment benefits hit their lowest level since September 1969, while a gauge of business activity hit an eight-month high in March.
That came even as speculation swirls that the Fed will turn more hawkish in its drive to rein in inflation. Tech firms are more susceptible to higher borrowing costs.
Meanwhile, the White House warned it was concerned that Russian President Vladimir Putin could lash out using chemical, biological or even nuclear weapons as he grows increasingly frustrated about his campaign in Ukraine being bogged down.
That comes after US President Joe Biden said earlier this week that the Russian leader’s “back is against the wall” and “the more his back is against the wall, the greater the severity of the tactics he may deploy”.
Still, analysts said the gain on US markets could be attributed to the united front presented in Brussels against Putin by NATO, the G7 and European Union, and hope that a ceasefire can be reached.
The groups unveiled a series of fresh sanctions against Moscow over its invasion, though European nations did not announce a ban on imports of Russian oil, which helped push crude lower on Thursday. Both main contracts were barely moved in Friday trade.
European nations did not announce a ban on imports of Russian oil, which helped push crude lower on Thursday
Still, the commodity remains elevated and analysts warned it could spike at any time.
“Oil is trading a touch lower after EU leaders could not table unanimous support for a comprehensive Russian energy embargo,” said Stephen Innes of SPI Asset Management.
“But the fact that oil is only trading a few dollars more down suggests the EU embargo was always a low-probability outcome. Still, it’s tough to be short oil as US inventories continue to dwindle, as we are bound to have more supply shocks in the future.”
A move to restrict Moscow’s ability to use the Russian central bank’s gold reserves to circumvent Western sanctions sent the yellow metal up sharply.
Equity markets in Asia were mixed. Hong Kong was weighed down by ongoing worries that US authorities could still delist Chinese firms traded on Wall Street, dragging the tech sector.
Shanghai, Mumbai, Taipei, Bangkok and Jakarta also fell, while Tokyo, Sydney, Singapore, Manila and Wellington edged up. Seoul was flat.