Desk Report
Publish: 17 Feb 2022, 10:49 am
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Asian markets mostly rose Thursday as investors assess the
situation in Ukraine after the West said Russia had not started withdrawing
troops from its border, while minutes from the Federal Reserve's January
meeting eased concerns it was set to hike rates sharply.
Meanwhile, oil prices tumbled more than two percent on
further signs of a breakthrough in Iran nuclear talks.
Global equities were sent plunging and crude surged after a
top US official said Russia could invade imminently, but Moscow appeared to
soothe those fears Tuesday by saying it had started withdrawing some soldiers.
The announcement and an apparently more conciliatory tone
from the Kremlin provided a much-needed lift to markets.
However, while the general mood on trading floors was upbeat
that tensions had eased, Washington dismissed the Russian claims and accused it
of sending more soldiers, adding that there were "indications they could
launch a false pretext at any moment to justify an invasion".
That came after NATO joined Ukraine in saying there was no
sign of any retreat, while chief Jens Stoltenberg said tensions in the east
with Russia were "the new normal in Europe".
The geopolitical uncertainty jolted US markets Wednesday,
though they enjoyed a late rally from intraday lows after the Fed minutes
provided no surprises.
The release had been keenly awaited as the bank tries to
walk a fine line of reining in four-decade-high inflation while not knocking
the healthy economic recovery off track.
Expectations are for officials to hike interest rates in
March and then several times again before the end of the year, but there has
been much debate about how much its initial move will be and how many more
there will be.
It has also said it will start to offload the bonds it has
on its balance sheet, which are also helping to keep borrowing costs down.
Some have warned of a 50-basis-point hike at first -- twice
what it usually announced -- and as many as six or seven more before January.
"The Fed's Minutes showed interest rate hikes are
coming and that they are readying for a significant reduction in the size of
the balance sheet," said OANDA's Edward Moya.
"Investors that were worried that the Fed would be
pressured to begin the balance sheet runoff fairly soon could breathe a sigh of
relief.
"The Fed sees inflation pressures broadening deep into
the year but they would not be rushed into making any decisions at a faster
tightening pace."
National Australia Bank's Ray Attrill added that the minutes
did not "appear to give an obvious succour to the idea of the Fed kicking
off the
tightening cycle with a 50-point move".
And Minneapolis Fed boss Neel Kashkari said aggressive rate
hikes would risk a recession, adding the bank should "not overdo it".
In early trade, Hong Kong, Shanghai, Sydney, Seoul,
Wellington, Taipei and Manila all rose, though Tokyo and Jakarta dipped.
On oil markets both main contracts tanked on growing hopes
that talks on the Iran nuclear deal could soon bear fruit.
Tehran's top negotiator Ali Bagheri Kani said an agreement
was "closer than ever" and while US and French officials were a
little more circumspect, the comments raised the possibility that Iranian crude
could return to the market soon.
"Positive developments in the US-Iran nuclear
negotiations are helping to calm oil prices," Claudio Galimberti of Rystad
Energy said.
"Although not a done deal yet, prices are sliding on
news of progress and broad consensus in the talks as it could ultimately see up
to 900,000 barrels a day of crude added to the market by December this
year."
The developments offset uncertainty over the Russia-Ukraine
crisis, which had helped propel prices towards $100 for the first time in more
than seven years, and comes as demand continues to improve as the world economy
reopens.
Data showed US stockpiles at their lowest since 2018.
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Topic : Asian markets Russia Ukraine
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