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Stocks regroup as investors hold their breath on Ukraine
CGTN
A pedestrian passes before a share prices board in Tokyo, February 22, 2022. /CFP

A pedestrian passes before a share prices board in Tokyo, February 22, 2022. /CFP

Asian stocks steadied on Wednesday and demand for safe-havens waned a little as investors regarded Russian troop movements near Ukraine and initial Western sanctions as leaving room to avoid a war, while a rate hike lifted New Zealand's dollar.

Commodity prices remain elevated, however, and traders are still nervous over the situation on Europe's eastern edge.

Overnight oil struck a seven-year high while the S&P 500 index tipped into correction territory, having dropped more than 10 percent from January's record peak.

S&P 500 futures were up 0.55 percent in Asian trade, after U.S. President Joe Biden left the door open to diplomacy.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent. Japan's Nikkei was closed for the Emperor's birthday holiday.

"The market sees the various sanctions ... as modest and perhaps not as aggressive as feared," said Chris Weston, head of research at brokerage Pepperstone.

"For now, one could assess there is a vibe across markets that Russian troops will hold Donbas, but push no further," he added, referring to the parts of eastern Ukraine that Russia has recognized as independent and has sent troops to reinforce.

The European Union and Britain also announced plans to target banks and Russian elites while Germany halted Russia's Nord Stream 2 gas pipeline, leading to a nearly 11 percent leap in Europe's benchmark gas price.

Japan followed on Wednesday, with Prime Minister Fumio Kishida saying the nation is prohibiting the issuance of Russian bonds in Japan and freezing the assets of certain Russian individuals as well as restricting travel to Japan.

Wheat futures had also leaped on Tuesday, posting the sharpest leap in three-and-a-half years and corn futures hit an eight-month high on concern that conflict could disrupt grain supply from the Black Sea export region.

Brent crude futures were last steady at $97.09 a barrel, having eased off Tuesday's top of $99.50. U.S. crude futures sat at $92.2 a barrel.

Currency markets

The crisis in Ukraine and the potential for surging energy prices come on top of nerves about whether the global economy can handle rising interest rates.

"That's what's weighing on markets – the uncertainty around how hard and fast central banks will go and what it does to the economy in terms of slowing it down," said Kerry Craig, global market strategist at J.P. Morgan Asset Management in Melbourne.

The Reserve Bank of New Zealand announced its third consecutive rate hike on Wednesday, lifting its benchmark cash rate by 25 basis points to 1 percent, as expected, but surprising investors with a hawkish tone.

The New Zealand dollar rose 0.6 percent on the news and is on its longest streak of daily gains in almost two years.

Elsewhere in currency markets, moves were fairly muted, though hopes that war in Ukraine can be avoided took some of the bid from safe havens.

The yen was steady at 115.00 per dollar, having hit 114.50 a day ago. The euro hovered around its 50-day moving average at $1.1331.

The Australian dollar, which has been supported by surging commodity prices, touched a two-week high of $0.7241.

Source(s): Reuters

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