May 26, 2022

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Asian stocks mixed after Wall Street plunge, US bans Russian oil

Asian stocks mixed after Wall Street plunge, US bans Russian oil

BEIJING (AFP) – Asian stocks rebounded on Wednesday after Wall Street fell and Chinese inflation rose.

Already high oil prices rose further, adding more than $2 a barrel after President Joe Biden’s ban on Russian crude imports.

Stock indices rose in Tokyo and Sydney while stock prices in Shanghai and Hong Kong fell. South Korean markets are closed for presidential elections.

Wall Street’s benchmark S&P 500 fell 0.7% amid persistent concern about the impact of Russian President Vladimir Putin’s attack on Ukraine.

IG’s Yeap Jun Rong said in a report that Asian markets “appear to be taking a breather” from the sell-off, but Wall Street’s pullback “could prompt some wait-and-see as geopolitical risks show no signs of abating.”

The Shanghai Composite Index lost 0.5% to 3,278.54 after the Chinese government announced that consumer prices rose 0.6% in February from the previous month and producer prices rose 0.5%.

Analysts said the increase was less than in recent months, but inflation is likely to pick up again as global prices for energy and other manufacturing inputs soar.

“Inflation will rise further in the near term,” Julian Evans-Pritchard of Capital Economics said in a report. The rise in global commodity prices due to the Ukraine war “will have a more pronounced impact on the March numbers”.

Hong Kong’s Hang Seng fell 1.6% to 20428.39.

The Nikkei 225 index in Tokyo rose 0.7% to 24973.73.

Sydney’s S&P-ASX 200 rose 1.1% to 7,054.60. New Zealand, Singapore and Jakarta rose while Bangkok fell.

The price of US benchmark crude rose $2.41 to $126.11 a barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $4.30 on Tuesday to $123.70.

Brent crude, the basis for global oil prices, rose $3.14 to $131.12 a barrel in London. And $4.77 advanced the previous session to $127.98.

Commodity markets have been affected by Putin’s war because Russia is the second exporter of oil and the third supplier of nickel, which is used to make electric car batteries, stainless steel and other products. Russia and Ukraine are also among the largest global sellers of wheat.

Nickel prices doubled on Tuesday to more than $100,000 a metric ton, prompting the London Metal Exchange to suspend trading.

The Asian Wall Street Journal and Bloomberg News reported that Tsingshan Group, a major Chinese producer of nickel and stainless steel, faces potential losses of billions of dollars in futures contracts. A woman who answered the phone at Tsingshan headquarters hung up when she was informed that a reporter was calling her.

On Wall Street, the S&P 500 fell to 4,170.70 on Tuesday, its fourth consecutive daily decline. It is now 13.1% less than its last record high.

The Dow Jones Industrial Average lost 0.6% to 3,2632.64. The Nasdaq Composite fell 0.3% to 12795.55. On Monday, it closed 20 percent below its record high.

Biden announced on Tuesday that the United States would block imports of Russian crude to punish Putin for attacking Ukraine. Biden said he acted in consultation with European allies, but acknowledged that they are more dependent on Russian oil and gas and may not be able to take similar steps immediately.

Biden said on Tuesday he hoped to reduce Americans’ suffering, but acknowledged that the ban would raise gasoline prices.

“Defending freedom will cost us, too,” he said.

Prior to Putin’s invasion of Ukraine, financial markets were already uneasy about the global economic outlook as the Federal Reserve and other central banks prepared to try to cool inflation by withdrawing ultra-low interest rates and other stimulus.

In the currency markets, the dollar rose to 115.86 yen from 115.74 yen on Tuesday. The euro rose to $1.0919 from $1.0908.