Asian stocks rebound but markets eye long-term risk between Russia and Ukraine

A woman wearing a face mask walks past a screen displaying the Hang Seng Index, in Hong Kong, China February 24, 2022. REUTERS/Tyrone Siu

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  • Asian and Wall Street stocks climb
  • Russia advances in Ukraine
  • Rally could be brief, analysts warn
  • Western countries sanction Russian banks and state-owned enterprises

SINGAPORE, Feb 25 (Reuters) – Asian markets rebounded on Friday after Wall Street’s surprising reversal overnight as investors weighed the longer-term impact of tough Western sanctions on Russia.

dropped troops, tanks and missiles on Ukraine.

European stock markets looked set to follow Asia higher even as Russia continued its attacks and global condemnation mounted, with FTSE futures adding 0.78%, European futures up 2, 2% and DAX futures on the German stock market up 1.56%.

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But U.S. stock futures fell in Asian trade, with S&P500 e-mini futures losing 0.61% and Nasdaq futures down 0.92%.

Some analysts said the sanctions imposed by the United States, Europe and a number of other countries were not as strong as markets had feared.

While Western nations redoubled their efforts to limit Russia’s ability to do business – by freezing bank assets and closing state-owned enterprises – they failed to disconnect Russia from the SWIFT international banking system or target its oil and gas exports, which some analysts said had helped markets recover. Read more

“The limits of economic pain that the ‘West’ was willing to tolerate to prop up Ukraine and punish Russia were revealed within 24 hours of Russia’s offensive start,” market analyst Jeffrey Halley said. senior at OANDA, in a note.

“The Russian offensive came at a time of already high inflation and a global shortage of raw materials, and the West immediately blinked. The process of throwing Ukraine under the bus geopolitics began. Markets clearly felt the same way, that this is the worst it can get…Thereafter, the power of the downside buying proved unstoppable.”

MSCI’s broadest Asia-Pacific ex-Japan equity index (.MIAPJ0000PUS) rose 0.57% at midday, the Shanghai Composite Index (.SSEC) rose 0.57% and the Japanese Nikkei ( .N225) increased by 1.27%. South Korea’s benchmark KOSPI gained 1.01%, recovering from a decline on Thursday.

Hong Kong’s Hang Seng Index and Australian stocks fell slightly, down 0.44% and 0.03% respectively, after a strong start.

Investors regained their risk appetite overnight after some steep initial losses, with major US indices posting gains, led by tech stocks.

But some analysts fear the rallies will be short-lived.

“Biden’s sanctions and his reluctance to send in troops are bringing some relief. But this dispute is going to be a protracted problem and add to global inflationary pressures that will keep central banks on track for tightening,” said Kyle Rodda, analyst at IG Markets in Melbourne.

“It’s good for now, but in the long term the market will be trending down,” he said.

Oil prices jumped again on worries about supply disruptions, with Brent crude rising 2% to $101.80 a barrel, while U.S. West Texas Intermediate (WTI) crude also rose 2%. 2.71% to $95.53, although both benchmarks are off their highs.

Safe-haven gold edged up 0.57% to $1,913 an ounce after falling from the multi-month high of $1,973.96 it hit on Thursday.

The yield on 10-year U.S. Treasuries was 1.95% after an initial decline to 1.84% on Thursday, its biggest daily decline since late November.

The U.S. dollar index, which measures the greenback against a basket of major currencies, fell 0.23% to 96.87, after rising on Thursday to levels last seen in the first wave. of the coronavirus pandemic. The Russian ruble rose again and settled at 85.52 against the dollar, after a record low of 89.986.

Ukrainian President Volodymyr Zelenskiy said on Thursday evening that a new iron curtain was descending on Europe.

Ukrainian soldiers fought Russian troops as they poured in from three sides while around 100,000 people fled their homes, according to the United Nations, many taking refuge in basements and metro stations to escape shelling . Ukrainian authorities said 137 people were killed on the first day of fighting. Read more

On Thursday, the Dow Jones Industrial Average (.DJI) closed up 92.07 points, or 0.28%, at 33,223.83 while the S&P 500 (.SPX) gained 63.2 points, or 1 .50%, to 4,288.7 and the Nasdaq Composite (.IXIC) added 436.10 points, or 3.34%, to 13,473.59.

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Reporting by Kanupriya Kapoor; edited by Richard Pullin and Kim Coghill

Our standards: The Thomson Reuters Trust Principles.

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