EQUITIES
Asia-Pacific markets struggled for direction on Thursday as investors reacted to yesterday’s 5% jump in oil prices and continue to assess the outlook for U.S. Federal Reserve monetary policy.
Japan's Nikkei 225 fell by 0.25%, after touching a two-month high in the previous session. South Korea’s KOSPI slipped 0.48%, and in mainland China, the Shanghai composite declined 0.55%.
Hong Kong's Hang Seng Index rose 0.31%, and in Australia, the S&P/ASX 200 climbed 0.12%.
Shares in Singapore outperformed the broader Asia-Pacific region, with the Straits Times index climbing 0.90% after the prime minister earlier today announced plans to ease COVID-19 restrictions. Shares of travel-related stocks were up, with Singapore Airlines and Sats, which provides ground-handling and in-flight catering services, jumping more than 2% each.
Major U.S. equities indexes declined more than 1% on Wednesday. The Dow Jones Industrial Average dropped 1.3%, to 34,358.5; the S&P 500 slid 1.2%, to 4,456.2; and the Nasdaq Composite dropped 1.3%, to 13,922.60.
OIL
Oil pushed higher on Thursday, supported by disruption of Russian and Kazakh crude exports and after a government report showed U.S. crude inventories dropped.
Oil extended gains as traders weighed additional supply disruptions from Kazakhstan's Caspian Pipeline Consortium (CPC) terminal, which had completely halted following storm damage. Russia's Deputy Prime Minister said oil supplies could be stopped for two months. The CPC pipeline carries about 1.2 million barrels per day of mainly Kazakh crude to a port on the Russian Black Sea coast.
Also boosting prices was a decline in U.S. inventories. Stockpiles in the U.S. fell by 2.5 million barrels last week, while inventories from the U.S. Strategic Petroleum Reserve declined by 4.2 million barrels, according to data from the U.S. EIA. Market participants had expected a modest increase in supplies.
The international benchmark Brent crude futures was at $120.93 per barrel, still much higher than levels below $112 seen earlier in the week. U.S. crude futures sat below the flatline, trading at $113.88 per barrel.
Both benchmarks jumped more than 5% overnight.
CURRENCIES
Treasury yields paused for breath after had powered higher earlier in the week as investors took in the strength of the economy and hawkish comments from U.S. policymakers. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 4.8 basis points at 2.107%. The yield on 10-year Treasury notes was at 2.322%, retreating from a nearly three-year peak of 2.4170% overnight.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.805 — still above the 98.4 level that it was below earlier this week.
The greenback continued to strengthen amid uncertainties over energy security in Europe. Concern arose when the Russian government demanded that settlement for gas transactions will be settled in its currency. This created further uncertainties over energy security in Europe that has been heavily reliant on Russia for its gas input. The announcement led to a sharp appreciation of the Russian rouble.
The rouble briefly leapt after the shock announcement to a three-week high past 95 against the dollar. It pared gains and but stayed at 106.4. Putin said the government and central bank had one week to come up with a solution on moving operations into the Russian currency.
GOLD
Gold prices held steady on Thursday, stuck between higher U.S. yields and a ramp-up in risk-aversion sentiment.
Spot gold slipped 0.17% to $1,940.70 per ounce, and the U.S. gold futures rose 0.20% to $1,941.00.
Palladium added 0.76% to $2,538.50 per ounce, spot silver was flat at $25.19 per ounce, while platinum shed 0.08% to $1,022.50.
ECONOMIC OUTLOOK
Asian shares mostly lower on Thursday, as investors and traders stay cautious in anticipation of developments in the Ukraine war and more hawkish comments from U.S. Federal Reserve officials.
Investors stay cautious in anticipation of further sanctions against Russia, which may lift commodity prices another round. U.S. President Joe Biden arrived in Brussels for a series of summit meetings on the Ukraine War, with Biden set to announce a U.S. package of Russia-related sanctions on political figures and oligarchs later today.
Investors also monitored oil moves after prices rose on Wednesday. Oil prices have been volatile for weeks since Russia’s invasion of Ukraine as investors assess the war’s impact on oil supply along with other concerns such as a COVID-19 outbreak in China.
