SINGAPORE (Reuters) – Asian shares and the euro fell on Friday after news of a fire near a Ukrainian nuclear facility following a fight with Russian forces, adding to investor concerns about the escalating conflict and sending oil prices higher.
Risk appetite has hit markets across the region, with European bourses preparing for a weak open as Euro Stoxx 50 futures while German DAX futures slip 2.6% and FTSE futures lose 1.4%.
Authorities said Friday that a fire that broke out in a training building near the Zaporizhzhya nuclear power plant, the largest of its kind in Europe, during heavy fighting between Russian and Ukrainian forces, has since been put out. Read more
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While that helped ease some of the initial panic that hit the markets earlier in the day, investors remain very concerned about the conflict.
“Markets are concerned about the nuclear fallout. The risk is that there is a miscalculation or an overreaction and the war drags on,” said Vasu Menon, executive director of investment strategy at OCBC Bank.
MSCI’s broadest index of Asia Pacific shares, excluding Japan (MIAPJ0000PUS.) It fell as much as 1.6% to 585.5, the lowest since November 2020, taking losses to date to 7%.
“Markets do not want the impact of infection and more European countries affected by the crisis,” Menon said. “If investors are looking to buy, they need to have a strong, long-term appetite for risk.”
Stock markets across Asia were in a sea of ​​red, with Japan (.N225) A loss of 2.5%, South Korea 1.1%, China (.SSEC) 0.8% and Hong Kong 2.5%, while Australia is heavy commodity (.AXJO) It decreased by 0.6%.
S&P 500 futures slipped 0.3% and Nasdaq futures shed 0.41%, offsetting sharp losses from early trading. Overnight, Wall Street ended lower as investors remained on guard over the Ukraine crisis, while higher commodity prices also weighed on market sentiment.
Investors sought safe haven in US Treasuries, sending benchmark 10-year yields down 14 basis points to 1.7%. Subsequently, they are back again to 1.79%.
A man wearing a protective face mask, after the outbreak of the coronavirus disease (COVID-19), walks past a stock price board outside a brokerage in Tokyo, Japan, March 10, 2020. REUTERS/Stoyan Nenov/Files
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Oil prices jumped on Friday after closing unchanged the day before, with the market also focused on whether OPEC+ producers, including Saudi Arabia and Russia, will increase production from January.
Brent crude futures for May rose to as much as $114.23 a barrel, last rising 0.5% to $111. The contract was down 2.2% on Thursday.
There was no slowdown in other commodities either, with Chicago wheat futures jumping nearly 7%, taking weekly gains to more than 40% due to supply-side concerns.
On the economic data front, Friday’s US employment report is expected to show another month of strong job growth, with Omicron COVID-19’s shifting contagion wave waning significantly.
Federal Reserve Chairman Jerome Powell on Thursday reiterated his comments that he would support an initial quarter-point increase in the bank’s benchmark interest rate.
Economists said a hike in interest rates is needed to cool high inflation.
“Specific and timely action is required from central banks to settle inflationary expectations as supply chain disruptions and rising energy prices are bolstering current inflation. The war has intensified these forces,” Westpac chief economist Bill Evans said in a note.
“Central banks have a responsibility to ensure that high inflation expectations do not become an integral part of the system – risking a wage/price spiral. Despite the uncertainties surrounding the war, this task should not be compromised,” he said.
Gold prices also rose on Friday, targeting their best weekly gain since May 2021. Spot gold was up 0.1% at $1,936.9.
In the currency markets, the euro lost more ground and was ready for its worst week against the dollar in nine months. It fell 0.3% to $1.10320 and traded above the day’s lows. It lost about 1.8 percent this week, the worst week for the euro since June 2021.
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(Anshuman Daga Reporting) Editing by Edwina Gibbs and Sam Holmes
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